Unlock All CCI Pro Plans at 15% OFF. Limited-Time Offer. Subscribe Now!

Partnership firm net profit before partners remuneration more than 8%, tax audit applicable?

1084 views

Save Share

Join Us Follow Us Add as Source

ADNAN HUSSAIN

Student CA IPC / IPCC

131 Points Posted on 30 August 2020

Hello,

I have a partnership firm,

Sales = 38,00,000.

Gross profit = Rs. 614000

Net Profit Before Remuneration to partners is Rs. 308000 i.e 8.1%

Remuneration is Rs. 270000 on 3 lakhs then 4800 on balance 8000.

Net profit after remuneration is Rs. 3200

So in the above case please suggest me whether am i liable to income tax audit?

Or can i file normal income tax return i.e ITR 5 with tax audit as the above case is for F.Y 2018-19.

Replies (3)

Quick Summary

This discussion explores whether a partnership firm is liable for a tax audit if its net profit before partner remuneration exceeds 8%. The user provides specific figures for sales, gross profit, and net profit before and after remuneration for FY 2018-19. The core question is whether the 8% threshold for tax audit applicability is calculated before or after deducting partner remuneration, and if filing a normal ITR-5 is sufficient.