Query about surcharge for individual having income over 1 cr

Tax queries 506 views 9 replies

A Jain

Underpaid Employee.

31 Points Joined March 2016

I am looking at accounts for a very lucky individual . Had a query regarding the same. My query is based on https://www.charteredclub.com/surcharge-on-income-tax/

The Facts:

This individual runs 2 businesses.

1 - A Proprietorship Firm : He is the proprietor. His income is Rs. 80 Lacs. (Pre-Tax)

2 - A Partnership Co : He is a 50% partner. The income of the firm pre tax is Rs. 90 Lacs. Post Tax - Approx 62.1 Lacs. His share - Approx 31 Lacs.

3 - For the purpose of this query, we will assume we have no deductions - 80C Etc.

So his total income is 80 Lacs + 31 lacs - 1.11 Crore

The Query:

When calculation total income, income from partnership companies is shown as exempt income (Since tax is pre paid).

However during calculation for Surcharge on IT for Income over 1 crore, will the income from the partnership firm be considered? In other words, will this individual be liable to pay the surcharge on IT or not?

Replies (9)

Rahul Sharma

Self employed

183 Points Joined January 2011

No surcharge as taxable income is bellow threshold limit.

Max Payne

employed

2574 Points Joined May 2008

Share of income from firm is exempt in hands of partner u/s 10(2A). So profit share of 45L (No deduction for Income tax in computing the firm's income) does not form part of Total Income. Total income is only 80L. Surcharge not applicable as Total Income does not exceed 100L.

A Jain

Underpaid Employee.

31 Points Joined March 2016

Thank you for your replies.

So basically if I understand correctly, a partnership firm's income does not get added to the partner's individual income for the purpose of calculation of Total Income for Surcharge on IT for Income over 1 crore.

varsha naik

Chartered Accountant

303 Points Joined October 2012

When taxable income exceeds Rs. 1 crore in case of an individual, surcharge is applicable.so in ur case, no surcharge.

varsha naik

Chartered Accountant

303 Points Joined October 2012

When taxable income exceeds Rs. 1 crore in case of an individual, surcharge is applicable.so in ur case, no surcharge.

Ruby kumari

icai

28 Points Joined March 2016

Surcharge is not applicable on the total income below the Rs. 1 crore

Ruby kumari

icai

28 Points Joined March 2016

Surcharge is not applicable on the total income below the Rs. 1 crore

A Jain

Underpaid Employee.

31 Points Joined March 2016

Madam ... Total income or Taxable Income?

Is profit from Partnership Firm part of Total Income?

Max Payne

employed

2574 Points Joined May 2008

Originally posted by : A Jain
	Madam ... Total income or Taxable Income? Is profit from Partnership Firm part of Total Income?

In simple terms, share of profit from partnership is exempt from tax in the partners' hands because of section 10(2A). Hence, share of profit from a firm does not form part of total income of the partner. Therefore in your case, total income is less than 1 crore. So surcharge is not applicable.

Technically taxable income is total income. Both the terms are used interchangeably. It is the income after claiming Chapter VI-A deductions (80C, 80CCC, 80CCD...... to 80U deductions)