Partners Salary for Income Tax Purpose, Income Tax

[Ashoka G]

Sir/Madam,

If a partnership firm pays salary to partners and pays Income Tax under Presumptive Scheme. Here the deduction claimed by the partner is claimed only on 8% of Income computed This salary deduction claimed is as per section 40(b) of the Income Tax Act. Partners were claiming Salary equally. Assumed figures were given below-

Total Income - ₹ 90,00,000/-

Actual Salary claimed by partners - ₹ 10,00,000/-

Assumed Income under Section 44AD - 7,20,000/-

Salary deductions claimed (300000*90/100+420000*60/100) - ₹ 5,22,000/-

Income Tax paid (720000-522000*30/100) = ₹ 1,98,000/-*30/100 = ₹ 59,400/-

Here my doubt is whether the partner needs to pay Income Tax under his own capacity on actual deduction claimed by each partner (i,e, ₹ 2,61,000/-) or on actual salary paid to partners after the value of tax paid under Presumptive Taxation scheme by Partnership Firm ₹ 4,01,000/- (i.e. (Rs.10,00,000-Rs.1,98,000)/2).