Partnership Firms - Income Tax Notes Part - 08
INCOME TAX NOTES PART - 08 PARTNERSHIP FIRMS INCOME TAX NOTES PART - 08 PARTNERSHIP FIRMS Scheme of taxation of partnership firms 1. Any salary, bonus, commission or remuneration (by whatever name called), paid/ payable to partners is allowed as deduction to the firm subject to some restrictions in the hands of firm. The amount which is allowed as deduction to the firm is taxable in the hands of partners. 2. The firm can claim deduction in respect of interest paid to the partners subject to a maximum of 12% p.a. This amount of interest, allowed as deduction in the hands of the firm, is taxable in the hands of partners. 3. The income of the firm is taxed at a flat rate of 30% plus surcharge @ 12% (if taxable income is more than Rs. 1 crore) plus cess @ 4%. When remuneration/ interest is deductible Payment of remuneration and interest is deductible if the following conditions are satisfied – 1. Conditions of section 184; and 2. Conditions of section 40(b) In other wo