Partner Remuneration Calculator
Calculate the maximum remuneration deduction allowable to working partners under Section 40(b) of the Income Tax Act.
Section 40(b) allows the higher of ₹1,50,000 or 90% of book profit on the first ₹3,00,000, and 60% of book profit above ₹3,00,000. Remuneration beyond this limit is disallowed as a deduction.
What is Partner Remuneration Calculator?
A partner remuneration calculator computes the maximum salary, bonus or commission that a firm can deduct for remuneration paid to its working partners under Section 40(b) of the Income Tax Act.
The deduction is limited to the higher of ₹1,50,000 or 90% of book profit on the first ₹3,00,000, and 60% of book profit above ₹3,00,000. Any remuneration beyond this limit is disallowed.
How does the Partner Remuneration Calculator work?
On the first ₹3,00,000 of book profit, the allowable deduction is the higher of ₹1,50,000 or 90% of book profit.
On book profit above ₹3,00,000, 60% of the balance is added to the limit. Remuneration paid beyond this limit is disallowed.
How to use the Partner Remuneration Calculator?
- Enter the book profit of the firm for the year.
- Enter the total remuneration paid to working partners.
- Read the maximum allowable deduction.
- Check the disallowed amount if remuneration exceeds the limit.
Example
Try the calculator with your own numbers
- Enter your values in the input fields above.
- Adjust the values to match your situation.
- The result updates instantly as you change the inputs.
Benefits of using the Partner Remuneration Calculator
- Plan partner remuneration to stay within the deductible limit.
- Avoid disallowed deductions and higher tax liability.
- Understand the Section 40(b) limits before finalising accounts.
Who should use the Partner Remuneration Calculator?
- Individuals planning loans, investments, or retirement savings.
- Salaried employees estimating taxes, EMIs, and take-home pay.
- Small business owners tracking costs, margins, and cash flow.
- Students learning personal finance and investment concepts.
Tips for getting the most out of the Partner Remuneration Calculator
- Use realistic return rates — past performance does not guarantee future returns.
- Re-run the calculation whenever your income, expenses, or goals change.
- Compare a few scenarios (conservative, moderate, aggressive) before making a decision.
Frequently Asked Questions
Who is a working partner?
A working partner is an individual who is actively involved in the day-to-day business of the firm. Sleeping partners are not eligible for this deduction.
What if the firm has a book loss?
If book profit is nil or negative, the allowable deduction is limited to ₹1,50,000 for remuneration to working partners.
Is the remuneration taxable in the partner's hands?
Yes. The remuneration is deductible for the firm but taxable as business income in the hands of the working partner.
Planning your finances is easier when you can see the numbers clearly. Use this calculator regularly to stay on top of your goals and make informed decisions.
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