Question ID :
41009
Partnership Salary and Interest
Is remuneration to partners and interest on capital to partners can be given below the prescribed minimum in Partnership deed. As per the IT Act, this is the maximum limit for payment, not mentioning anything showing that below which it can't be paid.
Posted by
SURAJ KUMAR CHOUDHARY
on
Mar 26, 2021
Filed Under
DIRECT TAXES
yes it can be provided lesser than limit mentioned in IT Act or partnership deed
Posted by
Mahesh Agarwal on
Mar 27, 2021
Answer ID :
81019
yes, less amount can be paid.
Posted by
SHUBHAM SONI on
Mar 27, 2021
Answer ID :
81022
No, because if the firm gives less or more, then the accounts are prepared not in accordance with the the clauses of the instrument of partnership deed meaning thereby, such payments can be disallowed per 40 (b)(ii).
Posted by
B.CHACKRAPANI WARRIER on
Mar 27, 2021
Answer ID :
81026
Strict interpretation of Section 40(b) reveals that deduction under IT Act is available only if remuneration & interest are paid IN ACCORDANCE WITH THE TERMS OF PARTNERSHIP DEED.
The partnership deed will read as "Rs.xx,xxx will be paid as monthly remuneration & xx% interest shall be paid". Hence, payment of remuneration and interest below such amount will not be allowed as a deduction.
Posted by
VENKATA PAVANKALYAN PESALA on
Mar 27, 2021
Answer ID :
81028
Yes. it can be paid below the limits mentioned in the deed.
Posted by
SHUBHAM SONI on
Mar 30, 2021
Answer ID :
81031
Interest and remuneration to partners can be paid less than the maximum limit specified under the IT Act, but it cannot be paid less than the minimum amount specified in the partnership deed. But if it is specifically mentioned in the deed that in case of less profit, less amount will be paid to partners, than only the firm can pay amount less than specified in the partnership deed.
Posted by
CA. chunauti dholakia on
Mar 31, 2021
Answer ID :
81063
Partnership Deed need to be read as a whole and not a particular clause. Generally, I observed common clause of the deed would be covered that liberalize the partners to decide amongst with the mutual consent.
If it is so found on whole reading, the remuneration and interest as you mentioned would be allowed.
Posted by
Pratik on
Apr 24, 2021