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

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
  Finance minister Nirmala Sitharaman has rejigged income tax slabs under the new tax regime and also raised the standard deduction under the new tax regime to Rs 75,000 from Rs 50,000, bringing cheer to salaried tax-payers as well as the pensioners. The deduction, however, will remain unchanged at Rs 50,000 under the old tax regime. For family pensioners, the deduction will go up from Rs 15,000 to Rs 25,000 under the new regime. This move will benefit four crore salaried individuals and pensioners, she said during her  Budget 2024  speech. As a result, a salaried individual in the new tax regime stands to save Rs 17,500 in income tax," she said, adding that the government will have to forego revenue of Rs 29,000 crore in direct taxes.
Post a Comment
Read more