The profit is allowed at a rate of 12% per year. Average partner capital during the year. Then the remuneration is deducted, say Rs 480000/- per year and int is 2.5 lake per year then 13 lake minus 4.8 lake minus 2.5 lake Balance is Rs 5.70 lake is taxable at the rate of 30,9% plus 3% supplement 176130 – 5284/- 181414/- Whether it`s partnering registration or changing the compensation sitt LegalWiz.in experts make it easier for you. Connect with LW experts on firstname.lastname@example.org for custom solutions. (ii) any payment of compensation to a work partner or partner that, in both cases, is not or does not comply with the terms of the partnership file; it should be noted here that if compensation/salary, etc., is only authorized by the work partners covered in Section 40 (b) iii), but that the payment of interest of no more than 12% per year is authorized by each partner, whether he works or not, since a partner`s word is used in 40 b) (iv). The different types of returns are defined in such a way as to reward partners for their participation. When developing the partnership act, partners must take all these clauses into account. While you can authorize all kinds of financial rewards through a partnership act, the tax liability is calculated in accordance with the Income Tax Act. Similarly, to pay compensation or interest, you must take into account their tax capacity. Returns paid beyond the specified limits are not permitted and are doubly taxed. In the books of the mare company, it is taxed flat at 30%, with other applicable zeals.
In addition, it is also taxed in the hands of partners at the applicable rate. Partner compensation and capital interest can only be deducted as commercial expenses up to the limit. The compensation to be paid to the above-mentioned work partners is credited to their respective accounts when accounting gains are realized. For the purposes of this clause, the term « BOOK PROFIT » within the meaning of S.40 (b) of the 1961 I.T. Act, or an amendment or staging of the act, is currently in effect. This total compensation is paid to the work partners, that is, I have a request here. What if the partnership was based on a slightly different business model? As in the case where there are 3 partners and they carry out IT projects of foreign clients. Suppose Project A was implemented by the first partner and Project B by the second partner, Project C, the third partner and a Project D on which the first and second partners are working.
Now, the first partner receives all the revenues from Project A plus 50% of Project D, and the second partner receives all the revenues from Project B plus 50% of Project D. However, for the purposes of this clause, interest paid by the company to a partner in a representative way and interest paid by the company to the person thus represented are taken into account. AO has laid off the remuneration paid to the partners, which has been requested to the tune of 4.40,000 aff. for the calculation of the company`s revenues in accordance with section 28 of assessee-firm. The reason for this non-admission was that it was not allowed under section 40, point b). The partnership agreement of 6/06/2007 indicated that the partners` salaries would be agreed between the partners. Since workers` compensation has not been quantified, but also not how compensation should be quantified, the condition set out in Section 40 (b). Assessees was not that the modification of the partnership act was not necessary to be registered with Registrar of Firms and Societies. The resolution on 1-4-2013, which increases the salaries of both partners when it is not registered in partnership, was therefore final. Partners are responsible for their currency and, from a non-monetary point of view, capital.