Gross income of a partner

You are partner in a firm so technically you are the owner in the firm so if your business is making loss how are its owner supposed to earn in that. You can pay salary to yourself but you won't be able to claim it as deduction in income tax because as per income tax in case of loss a partnership firm can only give 150000 as salary. If you give more salary you can give it but you can't claim it as deduction in income tax.

If your firm is making a loss how will it pay you salary in the end it's your firm if you ask for salary today you will get loss profit in future.

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Thank you

Hi,

- You are running hospital as partnership firm since 2012-3-13, almost 6 years have passed. I think this situation may have arisen to you before also. Remuneration of working partners is directly linked with the quantum of profit earned by the firm. Remuneration and Interest both have threshold limit in the Act. In case of loss, maximum deduction allowed is Rs.1,50,000.

- Keeping in view your above proposal, loss in firm will increase which will be set-off with other incomes only except salary and the salary you will get will be taxable at slab rate of 30%. Suppose salary is Rs.30,00,000 and taxable salary is Rs.25,00,000 then tax would be Rs. 4,00,000 (assuming both are getting equal salary). In case of firm tax would be Rs. 8,55,000 so saving would be 4,55,000 if you take salary from outside. If you will appoint some other doctors, you need to pay salary of Rs. 30 lacs and there would be cash outflow against what you will get as salary from other hospital.

- Loss will be set-off when firm will be in profits in subsequent years.

- It is better to take salary from the firm and the form should pay taxes on it as calculated above. Portion of salary disallowed will not be taxable in your hands.

Thanks

Hello Sir,

Please call me.

Thanks

I have informed you earlier also you are now a business man after being the partner and when you earn high profit you have to pay employees only the fix amount but you can take home unlimited amount so there are upside and downside of both the things.

Also I have mentioned that you can provide salary to yourself but you won't get deduction in income tax and as you yourself has mentioned that salary should only be due and you will pay to partners when the firm makes the profit so make an amendment to partnership deed that when the firm makes profit the partners will get 90% of profit as salary which will be distributed 50:50 between both working partners and your problem will be solved.

It's a fact and you have to accept it that being the owner of a business you will earn only when the business earns and you can't act like an employee.

Dear Sir,

Hope you are doing well !

As per the rules in case of loss in partnership firm, maximum deduction is restricted to Rs 1.5 lakh.

However, losses in partnership firm will be carry forward.

Thanks & Regards,

Payal Chhajed

As per my opinion, continue the same as partner.

It will give benefits later.

Hi,

I can understand your frustration but unfortunately this is the law/act and very little can be done about it. Having said that my suggestion would be to carry on with the current structure and carry forward the loss.

In the future years, whenever there are profits you can recoup all the losses you make now.

Regards,

Nikhil.

Dear SIr,

Totally agree with your concern but we can not go beyond law.

Looking at the practical scenario, please continue as a owner/partner of the firm.

Dear Sir,

Nowadays, social media has become very powerfull weapon.

You can tweet your concern.

Alone, we can not amend any law.