Share of profit will not be taxed in the hands of partners. But in the first sum they use those profit to find how much to club. Why?\r\n
Main Category: GST |Sub Category: Others |Reply Count: 1 |
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BMC Associates says Replied on 22nd August,2026 04:14 AM
Yes, this can be confusing because the partner’s share of profit is exempt, but it may still be used as a figure while calculating certain tax provisions.
Under Section 10(2A), a partner’s share in the total income of a separately assessed firm is not included in the partner’s total taxable income.
However, in some questions involving clubbing of income or computation of the firm/partner's taxable income, the firm's profit may first need to be determined or apportioned to establish the partner's share. This does not mean that the exempt share becomes taxable.
For example, if a firm has ₹10 lakh of taxable profit and a partner's profit-sharing ratio is 40%, the partner's share is ₹4 lakh. The ₹4 lakh is exempt in the partner's hands, even though it was calculated using the firm's profit. The calculation is simply necessary to determine the amount qualifying for exemption.
So remember:
Calculation of share ≠ taxation of share.
The share is calculated for determining the partner's entitlement, but Section 10(2A) keeps that share out of the partner's taxable income.
For questions involving partnership taxation, clubbing provisions, and tax computations, experienced chartered accountant firms in gurgaon, a chartered accountant gurgaon, ca firm in gurgaon, or ca in gurgaon can provide professional guidance.
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BMC Associates says Replied on 22nd August,2026 04:14 AM
Yes, this can be confusing because the partner’s share of profit is exempt, but it may still be used as a figure while calculating certain tax provisions. Under Section 10(2A), a partner’s share in the total income of a separately assessed firm is not included in the partner’s total taxable income. However, in some questions involving clubbing of income or computation of the firm/partner's taxable income, the firm's profit may first need to be determined or apportioned to establish the partner's share. This does not mean that the exempt share becomes taxable. For example, if a firm has ₹10 lakh of taxable profit and a partner's profit-sharing ratio is 40%, the partner's share is ₹4 lakh. The ₹4 lakh is exempt in the partner's hands, even though it was calculated using the firm's profit. The calculation is simply necessary to determine the amount qualifying for exemption. So remember: Calculation of share ≠ taxation of share. The share is calculated for determining the partner's entitlement, but Section 10(2A) keeps that share out of the partner's taxable income. For questions involving partnership taxation, clubbing provisions, and tax computations, experienced chartered accountant firms in gurgaon, a chartered accountant gurgaon, ca firm in gurgaon, or ca in gurgaon can provide professional guidance.
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