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What are the conditions of section 40b for getting deduction of remuneration in a firm?
Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm. Remuneration To Partners Remuneration includes salary, bonus, commission .RemunerationRead more
Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm.
Remuneration To Partners
Remuneration includes salary, bonus, commission .Remuneration in partnership firm is allowed as a deduction if following conditions are satisfied
- Remuneration is allowed only to working partners.
- Remuneration must be authorised by partnership deed and according to the terms of partnership deed. Also the amount of salary or manner of its computation is to be mentioned in the deed. If there is not any such provision in deed then no deduction is allowed. Normally people mentions in deed that salary is allowed to partners as per maximum limit defined under this section. This clause satisfies the condition for quantum of deduction.
- It should be related to the period of the partnership deed. If there is another partnership deed for another period then such deed’s provisions will be considered for that period.
- It is not allowed if tax is paid on presumptive basis under section 44AD or section 44ADA.
- Remuneration should be within the permissible limits as mentioned below. Please note that this limit is for total salary to all partners and not per partner.
See lessWhat is going concern?
Going concern concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason. In other words, a going concern is expected to have the followingRead more
Going concern concept is one of the accounting principles that states that a business entity will continue running its operations in the foreseeable future and will not be liquidated or forced to discontinue operations for any reason.
In other words, a going concern is expected to have the following things working in their favour:
Importance of Going Concern Concept in Accounting
Going concern concept is very important for the generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The concept of going concern plays a significant role in the way assets are treated.
The concept of depreciation and amortization are based on the assumption that a business will continue to perform its operations in the near future (this period is the next 12 months after an accounting period).
Advantages of Going Concern Concept
Following are some of the advantages of the going concern concept
1.Companies during the formation years will be purchasing fixed assets that will be requiring expenditure upfront, but such assets will be providing the benefits spread over a long term, that is well beyond one accounting period. Therefore, the going concern concept provides a way to record the value of such assets.
2. It is the basis on which the profits and losses of the business are recorded for the year to which it belongs.
Disadvantages of Going Concern Concept
Listed below are some of the disadvantages of the going concern concept:
1. Financial statements are prepared at cost and not on the basis of current market value. In such a case, if the company in an event of liquidation, will have assets valued at the market value, and as such these values will be different from the value determined at cost.
2. In the event of business being liquidated, the financial statements will be calculated on the on going concern basis, which can be misleading for the stakeholders.
See lessWhat is HUF? Can other than Hindus also form a HUF?
HUF means Hindu Undivided Family. You can save taxes by creating a family unit and pooling in assets to form a HUF. HUF is taxed separately from its members. Mainly A Hindu family can come together and form a HUF. And Buddhists, Jains, and Sikhs can also form a HUF. And also HUF has its own PRead more
HUF means Hindu Undivided Family. You can save taxes by creating a family unit and pooling in assets to form a HUF. HUF is taxed separately from its members.
Mainly
A Hindu family can come together and form a HUF. And Buddhists, Jains, and Sikhs can also form a HUF.
And also HUF has its own PAN and files tax returns independent of its members.
See lessWhat is security transaction tax?
STT is a kind of financial transaction tax which is similar to tax collected at source (TCS). STT is a direct tax levied on every purchase and sale of securities that are listed on the recognized stock exchanges in India. STT is governed by Securities Transaction Tax Act (STT Act) and STT ActRead more
STT is a kind of financial transaction tax which is similar to tax collected at source (TCS). STT is a direct tax levied on every purchase and sale of securities that are listed on the recognized stock exchanges in India. STT is governed by Securities Transaction Tax Act (STT Act) and STT Act has specifically listed down various taxable securities transaction i.e., transaction on which STT is leviable.
Taxable securities include equity, derivatives, unit of equity oriented mutual fund. It also includes unlisted shares sold under an offer for sale to the public included in IPO and where such shares are subsequently listed in stock exchanges. STT is an amount to be paid over and above transaction value and hence, increases transaction value.
See lessCan I take cash payment on sale of goods?
In order to put check on use of cash in high value transactions, the government has put a blanket ban on acceptance of cash beyond 2 lakhs by any person under Section 269ST. It is for each occasion like marriage, birthday party etc. or for each transaction like sale of gold, immovable property, holiRead more
In order to put check on use of cash in high value transactions, the government has put a blanket ban on acceptance of cash beyond 2 lakhs by any person under Section 269ST. It is for each occasion like marriage, birthday party etc. or for each transaction like sale of gold, immovable property, holiday package, renovation/furnishing of property etc. for which this restriction will apply. It may happen that the payer does not claim tax deduction for it but the restriction on recipient will still apply.
Unlike business expenditure, here the restriction is all pervasive for the whole transaction as a whole and not necessarily for payment made in a single day. For example, a caterer cannot accept two lakhs or more in aggregate for marriage reception form a single payer, whether on a single day or spread over several days. Law, generally, does not have any restrictions for payment of cash for transaction of purchase/sale of jewellery or immovable property etc. but if the value of a single transaction exceeds two lakhs, then seller is prohibited from accepting any cash beyond two lakhs for such transactions.
See lessWhat is the penalty for accepting cash more that Rs 2 Lakh
If a person receives any sum in contravention of the provisions of section 269ST, he will be liable to pay a penalty of a sum equal to the amount of such receipt under Section 271DA. However if a person proves that there were good and sufficient reasons for the contravention, no penalty will be impoRead more
If a person receives any sum in contravention of the provisions of section 269ST, he will be liable to pay a penalty of a sum equal to the amount of such receipt under Section 271DA.
However if a person proves that there were good and sufficient reasons for the contravention, no penalty will be imposed.
See lessHow much TDS is deducted on withdrawal of Cash from Bank
TDS @ 2% on cash withdrawal u/s 194N of the Act is applicable starting 1st September 2019, or FY 2019-2020. TDS will be deducted at a rate of 2% on cash withdrawals in excess of ₹ 1 crore if the person withdrawing the cash has filed income tax return for any or all three previous AYs. TDS will be deRead more
TDS @ 2% on cash withdrawal u/s 194N of the Act is applicable starting 1st September 2019, or FY 2019-2020.
TDS will be deducted at a rate of 2% on cash withdrawals in excess of ₹ 1 crore if the person withdrawing the cash has filed income tax return for any or all three previous AYs.
TDS will be deducted at 2% on cash withdrawals of more than ₹ 20 lakh and 5% for withdrawals exceeding ₹ 1 crore if the person withdrawing the cash has not filed ITR for any of the preceding three AYs.
Whereas,
TDS on cash withdrawal u/s 194N will not apply to withdrawals made by the following persons:
See less