The partnership firm is taxed as a separate entity, with no distinction as registered and unregistered firms. A partnership firm is required to execute partnership deed in the first year of operation mentioning Partners Salary and interest payable on capital invested by partner as per Income Tax Act. and later on execute supplementary partnership deed only if there is a change in the terms/constitution of the firm. Remuneration to partners will be taxed as "Income from Business & Profession"

In computing the total income of the firm, any salary bonus, commission or remuneration, to a partner, shall be deductible subject to certain restrictions.

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