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Computation of Income of Partner of a Firm - Income Tax - Ready Reckoner - Income TaxExtract Computation of Income of Partner of a Firm While computing the income of a partner including a minor partner a firm, the following points have to be taken into consideration Share income exempt under section 10(2A) The partners share in the total income of firm will be exempt in his hands and will not be included in his total income. His share in the total income of the firm will be calculated as follows:- By virtue of this exemption, a partner of share income in the partnership firm will not be taxed in respect of his share in the firm income since the firm itself will be taxed as a separate entity@30%. there will be no allocation of income among partners. On account of this exemption, he will not be entitled to set-off his share int the firm's loss against his other personal income. Chargeability of remuneration and interest Remuneration and interest received by a partner of partnership firm with the conditions prescribed under section 40(b) will be taxable in his hands as income from profits and gains of business or profession. If remuneration or interest paid to a partner is disallowed in the assessment of the firm due to the fact that are not in accordance with the conditions prescribed under section 40(b) then the partner will not be taxed in respect of the amount disallowed because in such a case the firm itself will be liable to pay tax on the amount which has been disallowed in its assessment. It is obvious that such remuneration or interest which has been disallowed in the hands of the firm but actually received by a partner will be assumed to be his hare in the income of such firm and exemption under section 10(2A) will operate.
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