banner_ad

Salary of partner

Tax queries 235 views 1 replies

Dear All,

There are two partners in a firm. One is active and the other is inactive. I understand that only the active partner can clain salary but what happens to the others share ?

For example if there is 4 lakh profit, what will be the computation ?

Thanks in advance

Replies (1)

Yes as per Income tax act Section 40(b)(v) only working partners can be paid remuneration. First thing to remember is on theory remuneration is not a method to distribute profits. If younwant remuneration as a method to distribute profits you must have  a formula arrived at based on what remuenration can be claimed for the working partner, what is the mutual profit sharing ratio and also what is the best tax incidence for the firm. It is too simple a proposition that 4 laksh can be equitably distributed to one working and one non working partner based on remuneration paid to only one of them.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
23 May 2026
Account Executive

SMJ global advisors pvt ltd

New Delhi

B.Com

View Details
Company
07 June 2026
Tax Associate

Rajkumar Jain & Co.

Ahmedabad

Graduate (Any)

View Details
Company
24 May 2026
Accounts & Tax Executive

PARAS KHURANA AND CO

New Delhi

B.Com

View Details
Company
26 May 2026
Education Content Creator

Adyayam Education LLP

Bengaluru

CA Foundation

View Details
Company
04 June 2026
Semi Qualified CA

Goyal Puneet & Associates

New Delhi

CA Final

View Details
Company
26 May 2026
Senior Accountant cum purchase Manager

Vardhaman Group of India

Pimpri Chinchwad

CA Inter

View Details
Company
09 June 2026
Accounts Associate

S Madan and CO

New Delhi

Graduate (Any)

View Details
Company
ARTICLESHIP 04 June 2026
Article

Rakhecha & Co.

New Delhi

CA Inter

View Details