taxation on LLP

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B R Ramesh (Querist)
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01 December 2010 Hi

There are 2 designated partners in LLP. Both withdraw the salary of Rs.17000 each p.m along with other perks. Now since the LLP is a Body Corporate but the tax provisions are similar to partnership. The LLP is paying the Rent of a residence to both its partners, apart from the above salary. How this shall be treated in the Books of accounts of LLP. Will it be allowed as a revenue expenditure and taxed in the hands of respective partner or treated as a taxable expenditure?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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01 December 2010 You can pay remuneration to designated partners within a limit as prescribed u/s 40(b) which is

“(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more;
(b) on the balance of the book-profit at the rate of 60 per cent”.

Anything paid over and above is not an allowable expenses.

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