Partnership Tax and Individual Tax
1. Partnership Tax
A partnership firm or a Limited Liability Partnership (LLP) is a form of organization wherein two or a few persons come together to run a business with a view of earning profits. Each such person is known as a partner, individually and a partnership firm collectively.
As per Section 2(23)(i) of the Income Tax Act, 1961 (‘the Act’), the ‘firm’ shall have the meaning assigned to it in the Indian Partnership Act, 1932, and shall include a limited liability partnership (LLP) as defined in the Limited Liability Partnership Act, 2008.
Partners in exchange for their service/capital receive the following from the firm:
a. Share of profit
b. Remuneration
c. Interest on capital or loan
2. individual Tax
Individual income tax (IIT) in India is based on resident-status and the source of the income. Under India’s individual tax regime, different tax rates are assigned to respective income brackets (tax slabs), which is the income earned by a taxable person.
The new income tax regime, which was introduced in 2021, is now made the default mode of taxation. Although the old tax regime will continue to be operational, the taxpayers will have to especially opt for it. It must be noted that no new changes have been made to the old income tax regime.