Remuneration to partners

Remuneration to partners is based on Partership deed.If Partership deed is silent in this case then no parter is eligible for remuneration other than profit.

In a partnership firm first of all agreement is signed and in this agreement certain conditioned are mentioned 
1) What is the remuration of partners - There may be or may not be, it rests on their mutual understanding.
2) How profit will be calculated - normally in ratio according to capital invested by them.

Hey thanks,

But I want to know that Partners are being given salary as per that fixed by the IT act. Sec 40(b)(v) wherein max 90% of book profits or Rs 3 lacs whichever is higher and on balance, 60%.

Then what will be the amount of remuneration to be paid to each partners?

Assume profit is around Rs 4,00,000/-

As per sec 40(b) of Income Tax Act, remuneration will be,

90% of 300000 + 60% on 100000 = 330000

This is max. permissible remuneration. 

Hi Preety, 

Thanks for your reply. 

Since you have said that the maximum allowable remuneration is Rs 330000/-

Suppose there are 3 partners having share of profits in 25:25:50, then shall Rs 330000 be divided as per this ratio or it can be any amount to any partner??

 As per my knowledge remuneration to partners includes salary, bonus or commission. It is not calculated in ratio. we deduct remuneration from book profits to arrive at profit or loss of partnership firm.

i.e. book profits - remuneration to partners = profit/Loss of firm

this profit/loss is distributed in profit sharing ratio.

such profit is taxable income of partnership firm.

Ok thank you. :)

can u plzz help me i wanna down load full income tax nd company law