Tax saving for partnership firm

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This query is : Resolved

Sandeep (Querist)

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)

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)

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)

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

Sandeep

Sandeep (Querist)

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

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

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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