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Payment of Remuneration

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gautam kathiriya

student

39 Points Posted on 05 February 2022

Respected All,

I have doubt about remuneration paid to partners.

Firm earned net profit in FY 2020-21 of rs.520000 after interst but before remuneration payable and in previous year i.e.2019-20 firm had unabsorbed depreciation of rs.250000.
So now what is my book profit u/s 40b on which firm can give remuneration.

thanks

Replies (2)

Quick Summary

This discussion clarifies how to calculate book profit under Section 40b for partner remuneration, especially when dealing with unabsorbed depreciation from previous years. The net profit for FY 2020-21 was Rs. 5,20,000 before remuneration. It's crucial to ensure sufficient funds are available to cover remuneration payments and that depreciation is accounted for to avoid trading losses.

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 05 February 2022

Book profit remains 5.2lacs..

Before making payment / provision for depreciation , make sure that there are funds available to make the payment..Else make proper adjustments..

There should be reasonable certainty about the future profits .Else from where you make the payments for remuneration ?