Salary of partner

Please confirm whether in the books of Partnership firm, whether there is net loss or profit before providing remuneration?

If there is book loss before providng remuneration, then the entire salary will be taxed in the hands of partners.

If there is book profit , then the remuneration paid over and above of the amount determined in accordance with Sec 40(b) will be taxed in the hands of partners.

Hi friends,

as per my point of view upto 150000 partners remuneration is allowed in case of loss also so it can't be totally disallowed.and the part of partners remuneration which is allowed as a expense in p/l account of firm for that amount partner is liable to pay tax and not on the left amount.

Regards 

chandan singh

there is net loss of Rs.12,000/- before providing remuneration. Remuneration as per deed is Rs.3,30,000. so net loss cames to Rs.3,42,000 so remuneration has been disallowed and a loss of rs. 12,000 has been filed in firms return. By mistake the minimum remuneration of 1,50,000 has not been calimed in firms return.

My query is in the partners individual return the salary from the firm will be 3,30,000 or nil?

Please clarify on this "If there is book loss before providng remuneration, then the entire salary will be taxed in the hands of partners".

Section 40(b) talks only about the disallowance in case of  the partnership firm & not about the partners.  So the total remuneration padi to the partners during the financial year, would be considered as business income & would be charged to tax accordingly.

In your case the total remuneration of 3.30lacs paid to the partners wud be chargeable to tax as business income in the hands of the partners.

Any interest, salary, bonus, commissions,or remunerations by whatever name callled which is due to or received by partner of a firm from the firm is taxable in his hands under sections 28(v) under the head profits & gains of business or professions.

whereas from the assessement year 2010-11 onwards, a firm can obtain maximum of 1,50,000/- as deduction if book profit is negative.

So in the case of firm,the firm cannot obtain deduction upto 3,42,000/-