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Presumptive Taxation- Treatment of Partnership Incomes in Hands of partners

Direct Taxation

A partnership firm that has been allowed presumptive taxation- Will it be allowed to pay salaries and interest on capital to the extent permissible under Income Tax Act, 1961? And will any excess paid (For example; Interest on Capital paid at 15% i.e. 3% more than the limit of 12%) be taxable in the hands of the partner? (The usual treatment is that appropriation would be disallowed and included in income of firm)?

Suraj Narayanan

CA Final

★ 7K+

04-Nov-20 20:40

353

Answers (1)

Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed. There is no taxability of excess interest paid.