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Remuneration to Partners in LLP – Limited Liability Partnership

LLP Can pay remuneration to its partners subject to the provisions of LLP Agreement, In other words if the LLP Agreement is silent then the same need revision to give effect to the same. Further Remuneration to Partners in LLP need to be within the limits prescribed under the income tax act 1962. The limits on partners remuneration is as under Remuneration to Partners in LLP.
S.No Condition Remuneration
On First 3 lakh of Book profit or loss.
Rs.1,50,000 or 90% whichever is more
On Balance
At 60%

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The Remuneration to Partners LLP paid to the partners is treated as an expense in the books of LLP and (TDS) Tax is not required to be deducted by a firm from remuneration payable to the partners, because For deduction of tax from salary under Section 192 of the Income Tax Act, 1961, employer-employee relationship must exist. Secondly, Section 15 of the Income Tax Act, 1961 states that, any salary, bonus, commission or remuneration, by whatever name called, due to or, received by a partner of a firm from the firm shall not be regarded as “Salary”. The remuneration paid to partners of a firm is taxable in the hands of receiving partner as business income under Section 28 of the Income Tax Act, 1961. Remuneration to Partners in LLP.

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