Presumptive Tax, Income Tax

[Ethirajan Parthasarathy]

As per section 44AD, even a partnership firm can avail the benefit of presumptive tax.

In view of omission of proviso to section 44AD(2), 6% or 8% of turnover will be treated as taxable profit after giving effect to remuneration and interest on capital of partners.

Let us assume 6% of turnover of a firm works out to ₹ 10 lakh. In such a situation, whether working partners have to offer salary which is deemed to have been allowed as income in their hands. If yes, how to arrive at the same.

Posts / Replies

[shwetal oswal]

Yes, we have to distribute salary to the working partners of that much amount, after which net profit of the firm works out to ₹ 10 lakhs.

[ARVIND JAIN]

It is advisable to go for Tax Audit as Book profit before partner remuneration would be too high if we consider NP as per Section 44AD . No Audit is advisable only in case real profit is so high to cover up remuneration and book profit.