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Is income tax applicable on individual share of profit from Partnership firm or LLP?

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B S

Senior Manager

50 Points Posted on 09 September 2021

1. Will income tax be levied on individual profit share of a partner of a partnership firm or LLP company? As profit is already taxed @ 30% on the firm or LLP, so will individual partners again have to pay income tax if the share exceeds the IT exempt limits?

2. Will this be the same for a Partnership firm & a LLP company or the rules are different for both?

Thanks in advance to all for the response & guidance.

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Quick Summary

This discussion clarifies whether individual partners in a Partnership firm or LLP need to pay income tax on their share of profits. The consensus is that profits are taxed at the firm/LLP level, and therefore, individual partners do not have to pay income tax again on their share, especially if it exceeds tax-exempt limits. The rules are the same for both traditional Partnership firms and LLPs, with the profit share being exempt under Section 10(2A) of the Income Tax Act.