Can anybody tell me how to calculate allowable remuneration to partners as per Income Tax act in case firm is carring on more than one business?
CA. Komal Savaliya (Chartered Accountant) (58 Points)
01 May 2008Can anybody tell me how to calculate allowable remuneration to partners as per Income Tax act in case firm is carring on more than one business?
CA Akshat
(article)
(422 Points)
Replied 01 May 2008
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
nivethini v
(administration executive)
(21 Points)
Replied 10 June 2010
hi,
i want know about how a company can make online tds payments and service tax. The processmshould be applicable for private limited companies.
Poornima
(Search on.... for knowledge)
(129 Points)
Replied 10 June 2010
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
Priyanka
(Article Assistant)
(31 Points)
Replied 10 June 2010
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
RAJU
(LEARNER)
(1089 Points)
Replied 10 June 2010
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
MAHENDRA SAHU
(ARTICLE)
(21 Points)
Replied 12 February 2011
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
BASAK
(NA)
(45 Points)
Replied 02 March 2012
What is BOOK PROFIT?
Is it (Net Profit+Remuneration+Intt. on capital)? or
(Net Profit+Remuneration)?
Pls. elaborate it.
CA SOURAV KUMAR GANDHI
(B.com (H), CA )
(133 Points)
Replied 10 March 2012
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
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