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Payment of Salary to Karta

deepak K Gujrati (CA-practice) (966 Points)

09 April 2009

HUF is the proprietor of a Trading Firm. Karta of the HUF is managing the firm and getting salary from HUF business.

Salary so received by the Karta is shown as Salary Income in his personal Return.

Please confirm if there is anything wrong in it.

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4 Replies

parthasarathy (Practising, C.A) (188 Points)
Replied 10 April 2009

hello sir, there is no problem for the karta of an huf to claim salary for managin the huf business. the salary so claimed becomes his individual income.

shweta jain (Assisstant Audit Manager) (124 Points)
Replied 10 April 2009

does huf have to deduct tds on the salary paid to the karta??

what if there is the relationship of proprietorship firm and the proprietor??

silky jain (chartered accountant) (167 Points)
Replied 10 April 2009

hi shweta,

if the salary exceeds the maximum amount not chargeable to tax after claiming deduction under chapter VIA.HUF hav to deduct tds on salary paid to karta.in case of proprietorship salary paid to proprietor will be treated as Drawing.

M.M.SURANA (Director -Taxation ) (532 Points)
Replied 10 April 2009

Mr. Deepak

I agree with Mr. Parthsarthy & Ms. Silky Jain. The Salary paid to karta is a allowable as an expenditure. but salary paid should be reasonable, as per nature & size of business, otherwise to some extent it may disallow. Further, HUF is holding separate status, and salary paid to karta for the running & management of business will be in the capacity of individual, hence TDS can be deducted if it is applicable as mentioned by Ms Silky Jain.

Surana, Chennai

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