Tax liability in partnership firm

1. Service tax payable from 2nd year onwards, however, ST registration would have been done from 1st year itself after crossing turnover of Rs. 9 lacs. ST liability is 14% of turnover of Rs.36.5 lacs
2. Credit of tax deducted at source by your clients can be adjusted against the income tax liablity of the firm. Rate of income tax for firm shall be @ 30%
3. Profit sharing shall be as per agreed ratio (50% as said by you)
4. All the expenses in connection with providing service can be claimed as deduction from the firm's income. In addition partner's remuneration and interest on capital (if any) can also be claimed as deduction if certain conditions are satisfied
5. Share of profit by partners is not taxable in the hands of partners but as income of the firm
6. There is also an option to avail benefit of presumptive income u/s 44AD if certain conditions are satisfied in which case 8% of turnover shall be treated as income. In this case, no expenses can be deducted except partner's salary and interest on capital

Dear vijay,

          yes, tax rate is 30% applicable after 10% of TDS & adujest them with tax liability.

         In computing the total income of the firm, any salary, commission, remuneration and bonus to a partner shall be deductible subject to certain restriction.

        and  the share of profit is exempt from income tax as it is already taxed according to the income tax slab for partnership firms.

Thanks & Regard

Vineet kumar

KPPM & Associates

Dear vijay,

          yes, tax rate is 30% applicable after 10% of TDS & adujest them with tax liability.

         In computing the total income of the firm, any salary, commission, remuneration and bonus to a partner shall be deductible subject to certain restriction.

        and  the share of profit is exempt from income tax as it is already taxed according to the income tax slab for partnership firms.

Thanks & Regard

Vineet kumar

contect: 7770010353

Thanks Poornima for the detailed reply.

So say if in the 1st year  total expenditure to the company is about Rs 4 .5 lacs/- including employee salaries and office rent etc 

The Profit is 5 lacs before tax. And the partners have also not taken their Share / Salary from the firm.

so what amout can be shared between the 2 partners as profit?

And 30% tax will be levied on what amount? Since Partner share also can be taken as deduction as u mnetioned.

Also 10% TDS (95K) has already been deducted   

Thanks Vineet

30% tax will be lived on Rs.500000. i.e Rs.150000. less tds Rs.95000.

thus net tax payble will be Rs.55000

So partners can only share profit after tax deductions

Can partners also have salaries apart from Profit sharing? And under what condition the Salries can also be exempted from tax if at all

1. If salary under slab rate.or

2.show the part of profit 

Conditions for claiming deduction on remuneration to partner and interest on capital: https://www.charteredclub.com/section-40b/

Vineet has already answered other queries