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What is the limit of remuneration of partner as per Income Tax act?
Section 40b describes the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. Excess to this amount will not be allowed as a deduction from the income of the firm. Remuneration in a partnership firm is allowed as a deduction if the following conditions aRead more
Section 40b describes the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. Excess to this amount will not be allowed as a deduction from the income of the firm.
Remuneration in a partnership firm is allowed as a deduction if the following conditions are satisfied:
Calculation of book profit
Profit as per Profit & Loss a/c – xxx
Add- Remuneration to partners if debited to Profit and loss a/c
Add- Brought forward business loss, deduction under section 80C
to 80U if debited to profit and loss a/c
Less – Income under house property, capital gain, other
sources if credited to profit and loss a/c
Book Profits xxx
Such Remuneration will be taxable in the hands of receiving partner as “Income from Business or Profession” but If such remuneration is not allowed as an expense in hands of the partnership firm then it will not be taxable in the hands of partners.
See lessHow should a trust use its income to get deduction under Income Tax Act?
A trust can have the following types of Income: Donation Anonymous Donation Income from property held under trust for charitable or religious purpose Capital gain from an asset held under trust Now let's understand the taxability of these incomes S.no. Situation Income subject to tax Taxability 1 DoRead more
A trust can have the following types of Income:
Now let’s understand the taxability of these incomes
i) 5% of total donations received by trust or
ii) Rs 1,00,000
1. Purchase of capital asset for trust
2. Repayment of loan taken for the purchase of a capital asset for trust
3. Revenue Expenditure incurred for trust
4. Donation to other trust registered u/s 12AA or u/s 10(23C)
(B) Income deemed to be applied for charitable purposes in India
a. Income is applied for charitable purposes in India in the year of receipt or in the immediately succeeding year.
b. On the basis of declaration under form 10 to the Assessing Officer on or before the due date of filing of return as per section 139(1) that such income shall be applied for such purpose in the year of receipt or succeeding year.
What is a charitable trust under the Income Tax Act?
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rigRead more
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.
See lessHow to form a charitable trust?
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rigRead more
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.
For creating a private Trust, the foremost requirement is that the Author must express with reasonable certainty by words or acts, an intention on his part to create a Trust. Thus, a Trust may be declared either by words, spoken or written or by acts. Where a Trust is declared by words, the language used must be clear enough to show an intention to create a Trust. No formal language is required to constitute an effective declaration of Trust, but the language used must make it certain that:
See lessWhat are the conditions of Interest payable to partners of a firm under the Income Tax Act?
a) Interest payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed 12% per annum. b) Remuneration payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed the following limit: On first Rs.Read more
- a) Interest payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed 12% per annum.
- b) Remuneration payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed the following limit:
- On first Rs. 3 Lakhs of book profit or in case of loss – Rs. 1,50,000 or 90% of book profit, whichever is more;
- On the balance of the book profit – 60% of book profit.
See lessWhat is the limit of remuneration of partner as per Income Tax act?
a) Interest payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed 12% per annum. b) Remuneration payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed the following limit: On first Rs.Read more
- a) Interest payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed 12% per annum.
- b) Remuneration payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed the following limit:
- On first Rs. 3 Lakhs of book profit or in case of loss – Rs. 1,50,000 or 90% of book profit, whichever is more;
- On the balance of the book profit – 60% of book profit.
See lessIs a trust is exempt from income tax?
Exemption to a trust Income of a charitable and religious trust is exempt from tax subject to certain conditions. The exemptions are provided to the trusts under various provisions, inter-alia, Section 10, Section 11, etc. Some of the exemptions allowed to a trust are as under: 1) Section 11 proviRead more
Exemption to a trust
Income of a charitable and religious trust is exempt from tax subject to certain conditions. The exemptions are provided to the trusts under various provisions, inter-alia, Section 10, Section 11, etc. Some of the exemptions allowed to a trust are as under:
1) Section 11 provides exemption for income derived from property held under trust wholly for charitable or religious purposes to the extent such income is applied for charitable or religious purpose in India. However, this exemption shall be subject to certain conditions.
See less2) In view of Section 12, income in the form of voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes shall also be exempt from tax (subject to certain conditions).
3) Any voluntary contributions received by an electoral trust shall not be included in its total income (subject to certain conditions).
4) Income of an educational institute is subject to exemption under Sections 10(23C)(iiiab)/(iiiad)/(vi).
5) Income of a hospital or other institution shall be eligible for exemption if it satisfies the conditions prescribed under Sections 10(23C)(iiiab)/(iiiad)/(vi).