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Query: Salary to partners - any limit

Category: Income Tax

Answer: Is their any limit on amount of salary we can give to partners. If no, it is allowed fully i.e. 100% or is their any calculation under which it is allowed up to some extent?

Date Posted 07-Aug-2019
Posted By Pinu
Views: 473



S G Kumari On 08-Aug-2019
As per Section 40(b) of Income Tax Act, 1961, Salary paid to partners is allowed subject to some conditions / calculations. Ans Salry paid to working partners is allowed not for the non working / sleeping partners. 1. on first Rs. 3 Lakh book Profit or in case of Loss Rs. 1.50 lakh or 90% of book Profit, which ever is higher. 2. on balance book profit @ 60% of book profit. Book profit for section 40(b) = Net profit + total salary of partners +- some other adjustments, as applicable

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