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Salary of partners

prince verma (audit trainee) (124 Points)

08 February 2020

if partnership deed provides salary of each partner is 5000 pm . can we expensed more than 5000 pm each partner while finalising profits? or we have to redraft partnership deed ??

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7 Replies

Dipesh Jha (PRACTICE ) (673 Points)
Replied 08 February 2020

Salary should be according to partnership deed
you have to redraft agreement

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RAJA P M ("Do the Right Thing...!!!") (128106 Points)
Replied 09 February 2020

Yes... I agreed to Mr Dipesh Jha.,

If You will pay above 5k as Salary then You must be note this in deed as per above reply by expert...

while finalising profits?

- in this view no problem for sharing Profit to partners account and they can withdraw the same as their will...

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prince verma (audit trainee) (124 Points)
Replied 09 February 2020

Thanks for the guidance experts..

Kapadia Pravin (17264 Points)
Replied 09 February 2020

Payment of salary must be in accordance with Partnership Deed. The Deed must provide the salary amount not exceeding maximum salary prescribed under Income Tax Act.

Any variation needs amendment in Deed.

Profit or Loss sharing in the ratio as per Deed.

Withrawals have to be in line with Clauses of Partnership Deed. It's not at WILL.

RAJA P M ("Do the Right Thing...!!!") (128106 Points)
Replied 09 February 2020

No limits for Withdrawal from the current account of the partners... Will means Partner can withdraw the amount without any limit in the Book balance..