Sec 44ad in case of firm

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Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2011 Dear sir please clear

Turnover 35Lacs
Profit u/s 44ad 2.80 lacs(8%)
Salary & Intt allowable to partner:Rs 1.50lacs

In ITR -5-P/L schedule in
NO Account Case
i have filled GR:35 lac
Exp:32.20lac
np come to:2.80lacs
NOW where to fill figureof intt & salary to partners:
so that taxablle profit come to 1.30 lac

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2011 Sir
Please Reply the query

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

23 July 2025 Let's break down your query step by step to ensure proper reporting of the salary and interest to the partners in the **ITR-5** while using **Section 44AD** for presumptive taxation:

### Scenario:

* **Turnover** = Rs. 35 Lakh
* **Profit as per Section 44AD** = Rs. 2.80 Lakh (8% of turnover)
* **Salary and Interest to partners** = Rs. 1.50 Lakh

You are filing **ITR-5**, and you need to show the proper salary and interest to the partners in the right places so that the **taxable profit** comes to **Rs. 1.30 Lakh**.

### Process for Reporting in ITR-5:

1. **Step 1: Presumptive Profit under Section 44AD**

* As per Section 44AD, the presumptive profit is computed at **8% of turnover**, which in your case is Rs. 2.80 Lakh (Rs. 35 Lakh × 8%).

2. **Step 2: Salary and Interest to Partners**

* The salary and interest paid to the partners are **deductions** under Section **40(b)** and need to be deducted from the **presumptive profit**.
* You mentioned that the salary and interest to the partners are Rs. 1.50 Lakh.

3. **Step 3: Taxable Profit Calculation**

* To arrive at the taxable profit of Rs. 1.30 Lakh, you need to deduct the salary and interest from the presumptive profit of Rs. 2.80 Lakh.

$$
\text{Taxable Profit} = 2.80 \text{ Lakh} - 1.50 \text{ Lakh} = 1.30 \text{ Lakh}
$$
* This is the taxable profit that you want to report.

4. **Step 4: Reporting in ITR-5**

* In **ITR-5**, you will enter the **presumptive profit (Rs. 2.80 Lakh)** in the **Profit and Loss Schedule** and then deduct the **salary and interest** under **Section 40(b)**.
* **Where to enter Salary and Interest to Partners**:

* Go to **Schedule B** of **ITR-5** under the section for **Partners’ Remuneration (Salary + Interest)**.
* Enter the total salary and interest paid to partners here (Rs. 1.50 Lakh).
* This will **reduce the presumptive profit** to Rs. 1.30 Lakh.

### Summary:

* **Presumptive Profit under Section 44AD** = Rs. 2.80 Lakh.
* **Salary and Interest to Partners** = Rs. 1.50 Lakh (this will be deducted from the profit).
* **Taxable Profit** = Rs. 1.30 Lakh.

**Where to Enter in ITR-5**:

* **GR (Gross Receipts)**: Rs. 35 Lakh.
* **Profit as per Section 44AD**: Rs. 2.80 Lakh.
* **Salary and Interest to Partners**: Rs. 1.50 Lakh in **Schedule B**.
* This will give you the **taxable profit of Rs. 1.30 Lakh**.

### Important Points:

* **No need for detailed accounts** under **Section 44AD**, as long as turnover is under Rs. 2 Crore.
* The **deductions under Section 40(b)** (Salary and Interest to Partners) are allowed separately from the **presumptive income** calculated under **Section 44AD**.

Let me know if you need further clarification on any of the steps or sections in the return!

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