Salary drawing by sole proprietor in his business

Proprietorship entity and the owner are treated as same person. So, no one can pay salary to himself. Even the income tax law does not allow deduction of such expense.

Thank u

Regards,

Rajeev.

No, A sole proprietor cannot draw salary from his sole proprietor business. He has to be a partner of a partnership firm or a director of a company to draw salary. 

If the business is HUF, can karta draw salary in individual status

Status of person can be determined by PAN 

Originally posted by : kunda
	If the business is HUF, can karta draw salary in individual status

Yes.

Since sole proprietorship isn’t a separate business entity, it’s impossible to consider proprietor as an employee and take a deduction for wages or salaries. Hence, no drawing of salary. Even if allowed, tax treatment is same.ie, whether from PGBP or Salary. 

Yes,

But he has to satisfy the conditions of Section 40A(2) of IT act, 1961 Also.

No, a sole proprietor cannot draw a “salary” from the business in the formal sense. In a sole proprietorship the business and the owner are the same legal person, so you are not an employee of the business and cannot pay yourself wages that would qualify as a deductible salary under income‑tax law.

What you can do is withdraw money from the business for personal use. These withdrawals are treated as owner’s draws, not salary, and they do not reduce the business’s taxable profit.