How is remuneration to Partners in a Firm taxed under Section 40(b)?

Partner remuneration is deductible for the firm only up to Section 40(b) limits (based on book profit — 90% of the first ₹3 lakh, 60% of the remainder, or a higher amount if specified in the partnership deed) and is then taxed as business income in the partner's individual hands.

How is interest paid to Partners in a Firm on capital taxed?

Interest paid to partners on their capital contribution is deductible for the firm only up to 12% per annum under Section 40(b), and is taxable as business income (not "income from other sources") in the partner's hands.

Updated 13 Oct 2026

Partner Remuneration & Interest Taxation for Partners in a Firm

How partner salary and interest on capital are taxed under Section 40(b), and what the firm can deduct. with a CA validating your return before it's ever...

Quick answer

Partner remuneration and capital interest are deductible for the firm only up to Section 40(b) limits, then taxed as business income for the partner — Indus Tax gets the computation right on both sides.

Get your checklist Browse all services

Fixed fee before we start100% online, anywhere in IndiaCA-reviewed every filing4.9 / 5 average rating

Useful tools for this topic

Start with a quick calculator, checklist or due-date page before you file.

How we work

A simple, trackable process — fully online.

Step 1

Share a brief

Tell us your situation via WhatsApp or our contact form. We'll send a document checklist.

Step 2

CA review

A qualified CA reviews your case, prepares the work, and confirms scope and cost upfront.

Step 3

Done & delivered

We complete the filing or compliance task and send you the acknowledgement and documents.

Start now

Frequently asked questions

Common questions about Income Tax Return Filing.

Search FAQs

2 results.

Talk to a CA today — clear scope, fixed quote

Share your goal and deadline. We'll send a checklist + quote on WhatsApp within hours. 5,000+ clients served across India and globally for NRIs.

✓ ITR filing, GST, NRI tax, company registration
✓ CA-reviewed, audit-ready documentation
✓ 100% online — no office visit needed
✓ No hidden charges — clear scope upfront

Call a CA WhatsApp Now

Talk to a CA today: ₹255 call-back in 30 minutes, ₹755 for a 30-minute consultation or ₹1,155 for an in-depth hour — adjusted in your fee if you go ahead.