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Section 44ADA query

Samar (Service) (5 Points)

06 August 2021

Do the partner in the partnership firm need to consider the exempt income such as profit share, in the gross receipt, for the purpose of limit of Rs 50lacs under section 44ADA?
Or can he consider only remuneration which is taxable under such partners hand as gross receipt?

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5 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 06 August 2021

Share of profit is exempt in the hands of partner

Samar (Service) (5 Points)
Replied 06 August 2021

Thanks but what about computation of gross receipt under section 44ADA?

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 06 August 2021

Option A – The partner will offer his entire remuneration as income and pay tax. Option B – Avail Section 44ADA and offer 50% of his remuneration as income and pay tax. Option C – If expenditure is more than 50%, get books of accounts audited and pay tax.

Samar (Service) (5 Points)
Replied 07 August 2021

Thanks, can one choose option B if the remuneration is less than 50lacs but it exceeds Rs 50lacs when share of profit is added (which is exempt under Sec 10(2))?