Section 44ad new

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Rahul M Matang

CA Final

56 Points Joined July 2014

I am partner in a firm.Suppose the firm's turnover For the F.Y. 2016-17 is Rs.48,00,000/-. Net Profit before interest to partner and salary is 9,00,000/- LAKHS Now if i want to file return under 44AD i will have to Pay tax on Rs. 2,88,000/- (i.e,6% of 48 Lakhs). So can i give interest and remuneration to partner for the balanced amount of Rs.6,12,000/- (9 Lakhs - 2.88 Lakhs) to make my profit as per section 44AD ? As in section 44AD it is mentioned that no salary or interest is allowed as deduction, does it mean that we can not deduct salary and interest from 2.88 Lakhs and can only deduct from 9 Lakhs or does it mean that we cannot at all give remuneration or interest to partner in case we are opting for 44AD and i will have to pay tax on 9 lakh rs. ?

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

196406 Points Joined July 2016

As per section you are supposed to offer minimum 6/8% of turnover as profits for tax assessment. I.e, once tax paid over the assessed income, you are at liberty to share the taxpaid capital of the firm as per the deed.

The amendment is the interest and partners' remuneration are not allowed to be dedected from the 6/8% that is required to be offered for presumptive assessment.

Rahul M Matang

CA Final

56 Points Joined July 2014

Sir then in above situation i can give remuneration and interest is that fine ?

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

196406 Points Joined July 2016

Here taxation part and actual remuneration & interest paid are both independent, you can give remuneration ........ but taxable income u/s 44AD doesn't differ.........

Rahul M Matang

CA Final

56 Points Joined July 2014

Sir my chartered account said me that you have to show 6% profit or higher (as per book) So my profit book profit is 9 lakhs and he is saying that you will have to show your profit as 9 lakhs and pay tax on it There will not be any deduction for remuneration or interest to partners in this case.