Skip to main content

 I. Increase in limit of remuneration to working partners of a firm allowed as deduction

With effect from Assessment Year 2010-11, Sub-clause (v) of clause (b) of section 40 of the Income Tax Act, 1961 ("the Act") prescribed a limit on allowable deduction to working partners of a partnership firm subject to the conditions prescribed therein. Over the past few years, certain domestic companies, individuals, Hindu undivided families, resident co-operative societies, new manufacturing co-operative societies are subjected to a lower rate of tax by virtue of provisions contained in sections like 115BA, 115BAA, 115BAC, 115BAD and 115BAE. In pre-budget memorandums and expectations from Union Budget 2024, the taxpayers desired that similar benefit be extended to partnership firms.

Although the budget proposals do not propose any such relief to the firms directly, it proposes to increase the limit of allowable deductions from the firm's income in respect of remuneration payable to its working partners and thus, the above expectation is fulfilled partially.

Presently, the limits are as under:

(a)On the first Rs. 300000 of the book profit or in case of a lossRs. 1,50,000 or at the rate of 90 per cent of the book profit, whichever is more.
(b) `On the balance of the book profitat the rate of 60 per cent.

The above limits are proposed to be increased as under:

(a)On the first Rs. 600000 of the book profit or in case of a lossRs. 3,00,000 or at the rate of 90 per cent of the book profit, whichever is more.
(b) `On the balance of the book profitat the rate of 60 per cent.

The above proposed amendment will be effective from 1st April, 2025 (i.e. from Assessment Year 2025-26 and onwards).

Comments

Post a Comment

Popular posts from this blog

Income Tax Return Filing Updates for FY 2024-25 (AY 2025-26)

 Hope you are doing well. We would like to share important updates related to Income Tax Return (ITR) filing for the Financial Year 2024-25 (Assessment Year 2025-26): ✅ Key Updates – FY 2024-25 (AY 2025-26) ITR Filing Due Dates: Individual / Salaried / HUF (Non-audit cases): 31st July 2025 Extended Due Dates is 15-09-2025. New Tax Regime Default: From FY 2023–24 onwards, the new tax regime is the default . If you wish to opt for the old regime, you must specifically choose it while filing your return (Form 10IEA in applicable cases). PAN-Aadhaar Linking: Ensure your PAN is linked with Aadhaar . PANs not linked are inoperative , and such taxpayers cannot file ITR or claim refunds. Pre-filled ITR Forms: The Income Tax portal now provides pre-filled details from Form 26AS, AIS/TIS, and Form 16. Please verify all data before final submission. Form 16 & TDS Certificates: Employers and deductors are issuing Form 16 and TDS certificates. Kindly arrange to col...
Post a Comment
Read more
  Benefits of Income Tax Return (ITR) Filing         Income Tax Return (ITR) filing is a form in which you declare your income details, taxes payable on other income, deductions & exemptions for a particular financial year. As per the tax laws, individuals with taxable income or income above the basic exemption limit have to mandatorily file an ITR every year before the due date. Under Section 234F of the IT Act, not filing ITR before the due date can attract a penalty of up to INR 5,000 and result in other severe consequences. Filing an ITR helps you to claim for tax deductions, thus reducing your tax outgo & growing your savings. But apart from this, there are additional income tax return filing benefits. Take a look-   Benefits of ITR 1. Easy Loan Approval The income stability of the borrowers is critical for the lenders. This is why borrowers must submit an ITR of at least three consecutive years when applying for loan products such as Home Loan...
Post a Comment
Read more

The due date for Income Tax return filing for Firms and HUF for FY 2021-22 is 31st July, 2022.

 Income Tax Department has notified 7 various forms up till now i.e. Form ITR 1 to ITR 7 for filing Income Tax Return for different types of income and different types of entities. It is important that every taxpayer should file his/her Income Tax Return on or before the specified due date. In this article, we have mentioned all the Important ITR Filing Due dates for individual, companies, LLPs and Firms, and HUFs for the FY 2021-22 (AY 2022-23).  Income Tax Return or ITR as we may call it is a form where all the taxpayers has to declare their taxable incomes from all the sources. Not only this but the taxpayer shall also have to mention all the eligible deductions and tax payments if any, in the IT Return Form. Filing of this form with the Income Tax Department is call ITR Filing or Income Tax Return filing. Irrespective of the Accounting Year adopted by a taxpayer, he/she needs to file an Income Tax Return for a particular Financial Year (i.e. April to March). Due dates for ...
Post a Comment
Read more