Partnership return u/s 44AD

can partners remuneration and interest be deducted from declared 8% profit u/s 44ad.
Replies (4)
Quick Summary
This discussion clarifies whether partner remuneration and interest can be deducted from the 8% profit declared under Section 44AD. The consensus is that these are part of profit appropriation and not deductible from the business profit itself. However, if the partnership deed allows, these can be deducted before profit distribution, making the total amount tax-free for partners. The applicability of audit under Section 44AB is also touched upon, noting that Section 44AD doesn't apply to agency or brokerage businesses.

No 8% profit includes only business profit and losses. Partners remuneration and interest are part of profit and loss appropriation a/c.

Ms. Shruti is correct in a way. But as per your deed if you need to distribute the profit, you can deduct salaries first and then shares in the profit. The total amount will be tax free in the hands of Partners.

8% Profit is after deducting remuneration and interest
Audit u/s 44AB is applicable if he is declaring income lower than thereafter specified u/s 44AD. But, section 44AD is not applicable to Agency, Commission and Brokerage. Hence, he can declare income less than 8%.

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