GK
TAXES IN INDIA
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Subject to limits specified in section 40(b)
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In full
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All of these
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None of these
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Detailed explanation-1: -Section 40b of the Income Tax Act, 1961 specifies the maximum limit of interest on capital and remuneration payable to partners in a partnership firm. The Income Tax Department doesn’t allow any amount above the prescribed limit as a deduction.
Detailed explanation-2: -As per Section 40(b) of the Income Tax Act 1961, Interest & Salary paid to the Partners by the Partnership Firm are allowed to be deducted as an expense only in case all the specified conditions are being adhered to.
Detailed explanation-3: -40(b) of the Income Tax Act, 1961. Section 40(b) of Income Tax Act places some restrictions and conditions on the deductions of expenses available to an assessee assessable as a partnership firm in relation to the remuneration and interest payable to the partners of such firm.
Detailed explanation-4: -Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm.