Sir, I have a query regarding taxability of consultancy income in the hands of partner it will be considered as a Consultant Fee or Considered as a Remuneration. ? There is one Hospital in which there are 3 partners. All are there is a working partner and eligible for remuneration. In that, some of the partners are providing specialized consultancy and get fees from clients for that specialized skills. Now question arise that, this consultancy fees is taxable in the hand of the respective partner as consultancy Fees and hospital claim that expense as a constancy fees to the partner for use of specialized skills of that partner OR it will be treated as a Receipts of the hospital and all that are taxable for calculation of Remuneration. Any such bifurcation is possible for that receipts in the partnership account or fully treated as a Receipts of Hospital.

Reply: You can get earning from the firm as salary, retainer fee, case to case basis billing and profit sharing.For salary, you need to pay income tax on the amount received. For other 3 option, you need to pay income tax on your receipt. You can claim your own professional expenses against your own income in these cases.Whatever mode you choose, please put it in partnership deed otherwise, it may create a problem later in professional life.

PARTNER CAN BE PAID EXTRA FEES IF HE APPLIES HIS SKILL WHICH OTHER PARTNERS ARE INCAPACITY TO PROVIDE. SUCH INCOME CAN BE CONSULTANCY CHARGES FOR HIS EXTRA SKILL AND NOT REMUNERATION.