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Following is the maximum limit of salary to all partners u/s 40(b) of Income Tax Act for both Business and Profession


Book Profit/Book Loss

Maximum limit of salary to all Partners

In case Book Profit is negative



In case Book Profit is positive


If Book Profit is up to Rs. 1,66,666


If Book Profit is between Rs. 1,66,667 to Rs. 3,00,000


If Book Profit is above Rs.3,00,000



Rs. 1,50,000


90% of Book Profit


2,70,000 +  60% of (Book Profit – Rs.3,00,000)


Book Profit means –

Book Profit = Taxable Profit or Loss of Business/Profession computed as per Income Tax Act. (but without deducting salary of partners)

Note –

  1. Income chargeable under the head “House property”, “Capital gains” and “Other sources” will not be a part of “Book Profit”
  2. Last year brought forward business losses will not be deducted from “Book Profit”
  3. Deductions from gross total income under sections 80C to 80U shall be ignored while calculating Book Profit.


ID: 84 | Views: 1046 | Date: 03-05-2013| Posted By:

CA Mohit Jain