Enter your figures
The fields start with sample figures. Replace them with your own; nothing is sent to a server.
Loading the calculator…
Reviewed by CA Nikhil Gupta · Last reviewed 11 October 2026
Enter the book profit, the remuneration actually paid and the limit in the partnership deed to see the deduction the firm can claim.
The fields start with sample figures. Replace them with your own; nothing is sent to a server.
Loading the calculator…
The Finance (No. 2) Act 2024 revised Section 40(b)(v) with effect from AY 2025–26. For the first ₹6 lakh of book profit, or a loss, the relevant reference is ₹3 lakh or 90% of the first slab, whichever is higher; on the balance of positive book profit, the statutory rate is 60%. For book profit of ₹12 lakh, the initial bracket is ₹5.40 lakh, and the next ₹6 lakh contributes ₹3.60 lakh, so the overall statutory limit is ₹9 lakh. Online tools using an initial ₹3 lakh slab can understate the deduction.
Even where the statutory ceiling is ₹9 lakh, the allowed remuneration cannot exceed what was actually paid or payable and what the effective partnership deed authorises. If the partners received ₹8.5 lakh and the deed permits ₹10 lakh, the initial deductible amount is ₹8.5 lakh, subject to other conditions. If payment is to a non-working partner, this salary deduction test does not support allowance. Backdated deed amendments and payments before authorisation must be separately assessed.
The starting figure is not ordinary net profit after tax. Section 40(b) explains that the tax-adjusted book profit is computed under the business-income provisions and adds back partner remuneration already deducted in the net profit where relevant. This can differ materially from the book balance. Finance should prepare a reconciliation from audited P&L to tax book profit before entering a number, or the slab calculation can be arithmetically perfect but fiscally wrong.
Maintain the signed deed, valid amendments, partner working-status evidence, remuneration allocation, tax computation, bank payment records and related TDS documentation. Payments such as interest to partners have a separate Section 40(b) simple-interest ceiling and may also fall under Section 194T. A working-partner remuneration limit therefore cannot replace a complete partnership return or payroll/TDS review. The output shows the deduction and difference as a transparent starting point.
The revised slab: ₹3 lakh or 90% on the first ₹6 lakh and 60% on the balance, which applies from AY 2025-26.
The revised bracket includes the statutory floor, subject to deed, remuneration and other conditions.
No. Interest has separate conditions and limitations.
Yes. The deduction cannot exceed what the enforceable deed authorises.
Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.
Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.
Background, worked examples and the rules behind these numbers.