Need expert advice please

[hazel welton]

Hi all,

I’m running a partnership business with my 3 partners (total 4 members). Our clients are outsiders and getting the amount as Dollar through paypal and it will be credited in our company account after the INR conversion. Its an export of service and now we are having some doubts regarding the income tax. We (4 partners) are dividing the total net income after deducting all the expenses of company and the company is paying the income tax for this net income too. We are dividing the amount equally from that net income and the income tax for that already paid by the company. So, should be again pay personal income tax for the amount we are dividing?

For example;

If the companies turnover = 30 Lakh

Company expense = 10 Lakh

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Net profit = 20 lakh

We are paying company income tax for this net income 20 Lakh and after that dividing it equally as 4 shares (20/4=5 Lakh).

So, 5 Lakh is our individual income and should we pay the income tax again for this personal income?

AI Summary

Partners Exempt from Personal Income Tax on Firm Profits Under Section 10(2A) of Income Tax Act, 1961 A partnership business comprising four members receives payments in dollars through PayPal, converted to INR, for export services. The net income, after expenses, is taxed at the company level before being equally distributed among the partners. The query is whether partners must pay personal income tax on their share of the net income. Responses indicate that individual partners do not need to pay personal income tax on their share, as profits from a partnership firm are exempt under Section 10(2A) of the Income Tax Act, 1961, and should simply be reported in individual tax returns.