A partenership firm has turover of Rs. 2627030
The deed provides parteners salary A and B @ 10 000 per month.
The firm chooses to compute its income U/S under 44AF using a rate of 6%.
The firm has paid its partners Rs. 80,000 each as partener salary. Taxable profit is computed as below
___________
6% of turnover 2627030= Rs. 1,57,622.
Book profit= Rs. 1,57,622.
Less parteners salary dedeuctible
U/S 40(b) restricted to Rs. 150000 or 90% book profit
=150000
___________________________
Taxable profit
Rs.7622
Tax @ 30.90 %
Rs.2355
Sir is this computation correct ? please help out.
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Replies (1)
No, u/s 40(b), the partners salary will be
90% of book profit or 150000 whichever is lower.
so, here in the case 90% works out to Rs 141860.
Hence your taxable profit will be the difference amount and tax will be computed @ 30 % on that
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