Implication of section 40(b) on 44AE/AD

Share This Thread
  1. murthy558

    murthy558 New Member

    In case a partnership firm who have opted section 44AE/AD (presumptive income) then 8% profit,is the book profit to calculate the interest or remuneratiion which is allowable to partners u/s 40(b)
  2. ZED

    ZED Well-Known Member

    Now [i.e w.e.f. 1.04.16, deduction is not specifically available for salary/remuneration and interest to the partner. It shall be deemed that it has already been allowed as deduction.

    As per the memorandum explaining the provision of the F.A
    "It is also proposed that the expenditure in the nature of salary, remuneration, interest etc. paid to the partner as per clause (b) of section 40 shall not be deductible while computing the income under section 44AD as the said section 40 does not mandate for allowance of any expenditure but puts restriction on deduction of amounts , otherwise allowable under section 30 to 38."

    [The following text has been omitted.]
    Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

    Do note that advance tax is payable, but it is payable by 15th March and not as per the normal provisions.
Draft saved Draft deleted