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Propietor-salary not allowed why ?

Others 1156 views 12 replies
Hi All, As per business entity concept business is different and owner is different. In that case Why the amount paid to proprietor as salary not allowed as expenditure for managing business?
Replies (12)
Salary to the proprietor is not allowed as expenditure for managing business because the proprietor conducts the business on its own motion.Salary to the partners are allowed bcz there are acting as agents of the firm who manage business on behalf of firm.All the profits of sole proprietorship firm belongs to the prop.That's y salary to prop. is not allowed.
Business entity concept is relevant only for accounting purposes. The legal status of proprietorship firm is nothing.

proprietorship business doesnt have a seperate identity, its status is nothing but Individual. in case of firms and other entity it had a seperate constitution and act.

Business income, proprietor ke income tax return me dikhaya jata hai.. To jaahir hai ki proprietor khud ko salary nai de sakta na..

The basic reason is same entity. In case of partnership legal entity is different of firm and there partners. it is not possible to give salary to your self since in case of proprietorship entity is same.

For salary, 1.Employee and employer both are required, the proprietor cannot give salary to himself 2. In proprietorship business, although the business entity concept applies yet the separate legal entity is not applied.
In case of proprietor ship its a kind a drawing for him self as he is only the owner..nd business entity concept is not apply..drawing made by him is just like salary...
Because their is no employer employee concept n agreement...u cannot pay to urself concept
if it received salary then the amount of salary allowed as expenditure but when he prepare his return the total income of proproietor include both income salary as well as profit from proprietor ship. Due to this legal status is same as individual. As per income tax act Partner and partnership firm both are different. si that the salart is allowed to partnership firm as expenses. partner and firm both have different PAN number, both are seperately assessed.
propreitor and business r a single entity in the eyes of law
Hi Kantijain and Rahul, Will the proprietor eligible for professional services for monthly accounting,income tax ,service tax matters and other consultancy
your answer is in ur question simple owner is nothing but employer.he doesn't want to getting the salary from him self bez employer and employees same.


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