Salary to proprietor

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 October 2016 Dear Experts,
Mr. X is running proprietorship concern hence he is doing work since morning till night to expand his business. Plz clarify weather Mr. X can take salary from his proprietor ship concern as he is doing hard work to devlop the business. I.e.
Salary to Mr. X Dr...xxxx
To bank/cash....xxxx
If so? Will AO allow the salary to proprietor or not.

Pls guide
Thanks & Regards
Ankit Agarwal

Sandeep Dharar

Sandeep Dharar (Expert)

25 October 2016 Better not to show salary, instead show drawings. Coz income Tax Act dosen't allow salary to proprietor(owner) of the company. A proprietor enjoy Profits from the concern, instead of salary. Simply saying a boss can't disburse salary to him/herself.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 October 2016 Sir can pls let me know the sec wherein salary not allow to proprietor.

Sandeep Dharar

Sandeep Dharar (Expert)

25 October 2016 Ankit, plz don't mind, but its just a common sense. Suppose u r a proprietor of a concern, so how can u claim salary from the business of urs?? If proprietor is engaged in the business then he is responsible to claim profits from the business, if he is claiming salary then it is clearly "evasion of tax"(by showing fake expenditure). And AO will never allow such expense. As per u a proprietor is engaged to expand his business, in the same way the employees are also providing their services in development of the business, so the employee are also eligible for share of profits in the business(will the proprietor agree??).

Murtaza I Bhagat online

Murtaza I Bhagat online

(Expert)

25 October 2016 For Salary there is a relation between employee and employer and in your case one person cannot be maintain both relations. Logically if you are owner of any business and if you claim salary as employee then you are transferring your salary from one pocket(hand) to another pocket(hand). Seriously you can't pay any salary to yourself. You only have to pay salary to others who are working for you can withdrawl some money from business as household expenses and claim profit as a business owner.

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