Partner’s Remuneration & Interest under Income Tax Act, 1961

• December 17, 2020
• CA Chandan Agarwal's Office

Maximum Limit of Interest and Remuneration to Partners under Section 40(b)

Introduction

Firms can claim deduction of Interest & Remuneration paid to Partners while computation of Profits & Gains from Business & Profession. However, there is ceiling limit on maximum amount of Interest & Remuneration paid under Section 40(b).

Remuneration:

Conditions for claiming deduction of Remuneration paid to Partners

1. It must be authorized by Partnership Deed.
2. It should be paid to only Working Partners.
3. It should not exceed Maximum permissible limit (Refer Next Point)

Maximum Permissible Limit: