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Remuneration in partnership

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Ataur Rehman

135 Points Posted on 28 October 2021

remuneration clause mein partnership deed ke ander kitne amount ka each partner remuneration dikha sakte hain. deed mein 2 partners hain. one Parner NRI hai. 2 partners ke liye kitne rupees tak remuneration dikha sakte hain. please guide me. please guide me

Replies (5)

Quick Summary

This discussion clarifies the rules around partner remuneration within a partnership deed. While there isn't a strict upper limit on the amount partners can draw, tax regulations, particularly Section 40(b), impose limits for deductibility. Special attention is given to NRI partners, where Double Taxation Avoidance Agreements (DTAA) and Tax Deducted at Source (TDS) provisions are crucial to consider. The advice suggests fixing remuneration based on expected profits and individual tax situations.

Janak Shah

357 Points Posted on 28 October 2021

There is no limit on remuneration. If there is a NRI partner it is always better to check DTAA otherwise TDS applicability will be involved.
Fix the remuneration based on expected profit and individual taxable income of partners.

CA Raj Doshi

Practising CA

5649 Points Posted on 29 October 2021

Remuneration shall be provided as per the agreed clause as per the partnership Deed. However maximum allowable remuneration for tax purposes shall be subject to limits u/s 40(b). Any amount paid or credited to a non resident partner shall be subject to the TDS provisions. Also, DTAA shall be referred subject to fulfillment of conditions, documentation and beneficial tax rate.

CA Aakarsh Jain

4330 Points Posted on 31 October 2021

Agree with the above comment

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 01 November 2021

Agree with raj ji

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