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Salary to Partner: 2009-2010

Sanjay (Director) (154 Points)

20 July 2010

What is the rule / calculation for computing the maximum salary payable to the partners.

I read another post which gives the details, but towards the end of the post, there is a contradiction regarding applicable FY.

Hence my question; how to calclate the maximum salary payable to the partners for FY 2009-2010 & FY 2010-2011.

Thx

Sans

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6 Replies

Pankaj (Student) (60 Points)
Replied 22 July 2010

For f.y 2009-10

1st 1,50,000 of book profit - 90%

For balance - 60%

FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 22 July 2010

Dear Sanjay,

There is no limit on salaries payable to partners.It is paid in accordance with the partnership deed.

I think you are asking about remuneration to partners.The maximum permissible limit for remuneration to partners is

First Rs 3,00,000 book profit - Rs 150,000 or 90% of book profit, whichever is higher

Balance book profit - 60% of book profit

Regards,

Fatema

1 Like

Santosh Madanlalji Malu (Certified Public Accountant Chartered Accountant Company Secretary) (121 Points)
Replied 22 July 2010

Amount of maximum remuneration to be payable is give in section 40(b) of the Income Tax Act, 1961 and it is also subject to provision of partnership deed. thus remuneration payable to working partner as authorised in deed shall not exceed than limit of Deed or section 40(b) whichever is lower

1 THE Finance Act 2009 amended the rates as under

Maximum remuneration payable to partner shall be as unde

on first Rs 3,00,000/- of book profit - Rs 150000 or 90% of book profit whichever is more

and on balance of book profit - @ 60%

this amemdment will come into force w.e.f. 1.4.2010 thus for 2010-11 i.e. Assessment year 2011-12 above rates to be applicable however for Financial Year 2009-10 i.e. Assessment year 2010-11 rates earlier to this amendment to be applied

before this amendment rates was as under

1) Professional Firms

on first 100000 of book profit - Rs 50000 or 90% of book profit

on next 100000 of book profit - @ 60%

on balance of book profit - 40%

2) Business Firms

on first Rs 75000 of book profit - Rs. 50000 or 90% of book profit

on next Rs. 75000 of book profit - @ 60%

on balance of book profit - 40%

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 22 July 2010

dear sir

friend fatima is right.it is taxable in the hands of partners and sir remuneration paid to working partner is allowable only.

regards

tarun rustagi

vinay kumar (student) (21 Points)
Replied 25 November 2011

Please tel me how to calculate the partner remunaration and salary in case of Loss

Regard

vinay

Z ( ) (2960 Points)
Replied 25 November 2011

The maximum Permissible limit is

On first rupees 300,000 of book profit or in case of loss rupees 150,000 or 90% (whichever is more)

The partnership deed should mention amount or atleast the procedure for calculation of remuneration

for eg.

That in case of insufficiency of profits or in case of loss, the partners shall be entitled to draw minimum remuneration of Rs. 50,000/- in each accounting year in the ratio of 1:1."

which i found on https://webcache.googleusercontent.com/search?q=cache:7rKfUT-JqKEJ:www.fam-is.com/Incometax_forms/Partnership%2520Deed-business.rtf