Taxation on partners of LLP

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This discussion clarifies the tax treatment for partners of an LLP. Profits distributed to an LLP partner from another LLP are generally exempt from tax under Section 10(2A) of the Income Tax Act. However, any remuneration or interest paid by the joint venture LLP to its partner LLP is considered taxable income for the receiving partner LLP.

Darshan Mewada

Darshan Mewada (Querist)

05 August 2024 PQR LLP, Mr. C & Mr. D are the partners of XYZ Joint Venture LLP.
XYZ Joint Venture LLP doing business & pays 30% income tax on their income
After paying tax (30%), XYZ Joint Venture LLP shares profit to their partners in their profit sharing ratio.
Question, Is PQR LLP also liable to pay income tax @30% on profit received?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 August 2024 The share of profit received is exempt from tax under Section 10(2A) of the Income Tax Act.

Darshan Mewada

Darshan Mewada (Querist)

06 August 2024 Thanks for your reply.
But I have query that...
1) Will that profit be also exempted for the other partner which is PQR LLP?
2) If the XYZ joint venture LLP gives any remuneration or interest to its partner which is PQR LLP, will it be taxable to the partner LLP?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 August 2024 1 yes.
2 Yes it's taxable.

Darshan Mewada

Darshan Mewada (Querist)

06 August 2024 Thanks a lot sir. I am obliged.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 August 2024 You are welcome...
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