8 profit before allowing interest /remuneration or after allowing interest/remuneration

8% profit should relate to book profit in case of firm before allowing remuneration  to partner as remuneration  can be taxed in partners individual return

Under Sec 44AD, the presumptive income (6%/8%) is the final business income. Partner remuneration and interest can't be deducted from it any more.

• The proviso to Sec 44AD(2) that allowed a firm to deduct partners' salary and interest from presumptive income was omitted from AY 2017-18 (Finance Act 2016). So a firm offering 44AD income must offer at least 6%/8% of turnover. There is no further deduction for remuneration or interest (Sec 44AD(2) deems all Sec 30–38 deductions allowed).

• So, in effect, the 8% is "after" allowing remuneration, in the sense that the firm's taxable income is 8% even if it actually pays the partners. The firm can't reduce 8% further.

• Partners' side: remuneration and interest received are taxable for partners under Sec 28(v) only to the extent allowed as a deduction to the firm. Since the firm gets no separate deduction under 44AD, there is a view that partners' remuneration is not taxable in their hands (no double taxation). Tribunal views are mixed, so many partners still offer it conservatively.

• If the firm's actual profit after remuneration is lower and it wants to claim that, it must keep books and get audited (Sec 44AB(e)) if income exceeds the exemption limit. Firms have no basic exemption, so effectively always.

• TDS under Sec 194T on remuneration/interest from 1 April 2025 applies regardless.