Tax saving for partnership firm

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Sandeep (Querist)
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20 July 2017 Hello friends One of my client have partnership firm and his gross TO is 4650000 so suggest me a gud tax plan fr filing the return for fy 2016-17 .

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 July 2017 Sandeep,

should not that be your job to actually do some research instead of just outsourcing the work to online help desks?

Sandeep

Sandeep (Querist)
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21 July 2017 Sir i did all the research and study for the same but am getting some doubt in that so I thought the explanation for this query from exports may resolve my doubt so am rising this query . Not for out sourcing my job sir. I need clarity in that case so i rise that query. If u can explain me, then that would be help me a lot.

Studentsca

Studentsca (Expert)
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21 July 2017 From the information that you have provided only option is to opt for section 44 AD.

Sandeep

Sandeep (Querist)
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21 July 2017 Is there any deduction i can take for firm's return.?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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26 July 2025 Got it! Here’s a clear breakdown regarding tax saving for a **partnership firm** with turnover around ₹46.5 lakhs for FY 2016-17:

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### 1. **Section 44AD (Presumptive Taxation for Businesses)**

* This section allows businesses with turnover up to ₹2 crores to declare income at 8% (or 6% if digital receipts).
* If you opt for this, you **cannot claim any other business expenses** or deductions.
* However, partnership firms **cannot claim deductions under 80C, 80D, etc.** as these are for individuals.

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### 2. **Deductions available to a Partnership Firm**

Unlike individuals, **partnership firms** don’t get the luxury of many tax-saving deductions, but some expenses can be deducted from business income before arriving at taxable profit:

* **Business expenses**: Rent, salaries to staff, electricity, depreciation, interest on loan for business, repairs, legal fees, etc.
* **Remuneration and interest paid to partners** (subject to limits under Income Tax Act).
* **Depreciation on business assets** as per Income Tax rules.

So, these reduce the taxable income.

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### 3. **Tax Planning for Partnership Firm**

* **Maintain proper books of accounts** to claim all legitimate business expenses.
* Consider **salary and interest to partners** within allowable limits to reduce taxable income.
* If turnover is under ₹2 crore and you want less compliance, opt for **Section 44AD** presumptive scheme.
* There’s **no separate "tax saving investment" option** for firms like Section 80C for individuals.
* Firm cannot claim deductions for investments in tax-saving instruments.

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### Summary:

| Aspect | Available to Partnership Firm? |
| ----------------------------- | ------------------------------ |
| Section 44AD Presumptive Tax | Yes (if turnover < ₹2 crore) |
| Business Expenses Deduction | Yes |
| Salary & Interest to Partners | Yes, within limits |
| Section 80C / Tax Saving FD | No |
| Other Individual Deductions | No |

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If the turnover is ₹46.5 lakh (less than ₹2 crore), your client can **choose Section 44AD** to simplify tax filing but can’t claim expenses.

If your client wants to claim expenses, then **normal provisions apply** with full books of accounts, and you can plan by paying reasonable remuneration to partners, etc.

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If you want, I can help draft a checklist or detailed plan based on actual expenses or structure. Would that help?

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