Remuneration u/s 40(b)

first of all find out book profit from all business in aggregate and then apply the limit of 75000 or 100000 as the case may be

hi,

  i want know about how a company can make online tds payments and service tax. The processmshould be applicable for private limited companies.

Hello Komal ,

First thing in calculation of remuneration of partner it does not matter how many businesses are carried on by the firm.That is only relevant for applicability of Sec 44 AB. 

Following is the manner of calculation of remuneration as per IT Act( Ammendment A.Y 10-11) :

Book Profit                                                             Maximum Remuneration

Upto Rs 300000/-                                                 Rs. 150000/- or 90% of the book profit whichever is more

Balance book profit                                               60% of book profit

Hiii,

Step :1-First we need to calculate Book Profit. Book profit menas the Net Profit as per Profit & Loss Account  as increased by the amount of remuneration paid or payable, if such amount has been debited while computing the Net Profit.

Step 2:-  As said by Poornima

Priyanka

Hi,

I believe that remuneration needs to be computed for the firm as per partnership deed. The allowable remuneration will be the sum as provided in the partnership subject to limit specified in Section 40(b).

Regards

Dharmaraju

As per U/s 40(b) of income tax act remunaraton to all partners during the previous year are:-

A) on the frist 3,00,000/- of the book profit or in case a loss- Rs. 1,50,000/- Or   90% of book profit whichever is more

B) on the balance of the book profit (i.e. Book profit  Less 3,00,000) -  at the rate of 60%

However remunaration paid to sleeping partner not allowed in Incom tax

What is BOOK PROFIT?

Is it (Net Profit+Remuneration+Intt. on capital)?   or

(Net Profit+Remuneration)?

Pls. elaborate it.

Book Profits includes only income under the head P/G/B/P, further -

INCOME UNDER THE HEAD P/G/B/P (BEFORE ADJUSTING B/F LOSSES)                                     xx

Less: B/f depreciation                                                                                                                                    xx

Add: Remuneration/Salary debited to P/L A/c                                                                                            xx

Add: Interest to the extent disallowed u/s 40(b)                                                                                         xx**

                                                                                                                             BOOK PROFITS                   XXX

** Interest to the extent it exceeds 12% p.a. is disallowed u/s 40(b)

Deduction u/CH VI is not to be made for the purpose of book profits.

LIMIT FOR REMUNERATION TO PARTNERS

1.   For First 300000 of book profits or

      in case of LOSS                                                                                         150000 OR 90% of book profits

                                                                                                                                                 ----- higher

2.  For Balance of Book profits                                                                        60% of book profits