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SALARY PAYMENT TO SPOUSE

Anirban Dey (14 Points)

20 November 2020

Can salary be paid to a spouse of members in partnership firm?

Spouse will file ITR respectively based on income received
Partnership Firm will also deduct TDS on salary respectively

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6 Replies

Shubham (Practice) (869 Points)
Replied 20 November 2020

Yes
Salary can be paid to a spouse of a member.
However, section 40A(2) of the Income Tax act should be kept in mind where "excessive" or "unreasonable" payment is disallowed as an expenditure.

Shivam RC (Student) (23683 Points)
Replied 20 November 2020

Yes Salary can be paid to Spouse of a Partner in a Partnership Firm. As rightly said by Mr. Shubham Sir, you have to keep in mind the Provision of Section 40A(2) of the Income Tax Act 1961.

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Anirban Dey (14 Points)
Replied 20 November 2020

Can anyone explain the same with an example?

JATINDER KUMAR (Accountant) (3662 Points)
Replied 20 November 2020

Yes

You can paid salary to Partner Spouse if actually works in Partnership Firms

No restrictions

Shubham (Practice) (869 Points)
Replied 20 November 2020

@ Anirban Dey- Suppose partnership firm pays a high amount of salary, say 20,00,000 per year to the spouse. Now suppose rhe Assessing Officer is of opinion that someone with educational qualification and prior work experience of spouse is expected to be paid around 8,00,000. So he/she may disallow excess 12,00,000 under section 40A(2).