1. Flat Tax Rate for Partnership Firms

• Partnership firms are taxed at a flat rate, not slab-based like individuals
  
• The current income tax rate is 30% on the total income of the firm
  
• Surcharge may apply if income exceeds certain limits
  
• Health and Education Cess at 4% is levied on the total tax
  
• The firm is taxed separately from the individual partners

2. Taxable Income Calculation

• Income is computed after deducting all business expenses
  
• Interest on capital and remuneration to partners is allowed, within limits
  
• Any income from other sources is also included in the total taxable income
  
• Net profit is calculated according to the provisions of the Income Tax Act
  
• The final amount is subject to the flat 30% tax rate

3. Conditions for Allowable Deductions

• Remuneration to working partners must be authorized by the partnership deed
  
• Limits for deductible remuneration are defined under Section 40(b)
  
• Interest on capital is allowed up to 12% per annum
  
• Expenses must be genuine and incurred wholly for business purposes
  
• Disallowed expenses must be added back to the total income

4. Alternate Minimum Tax (AMT) Provisions

• AMT applies if total deductions under Chapter VI-A are claimed
  
• AMT is charged at 18.5% of adjusted total income
  
• The firm must maintain AMT records and file Form 29C if applicable
  
• AMT ensures that firms claiming heavy deductions still pay minimum tax
  
• Credit for AMT paid can be carried forward for up to 15 assessment years

5. Filing and Compliance

• Partnership firms must file the ITR-5 form with the Income Tax Department
  
• Tax must be paid in advance if the liability exceeds ₹10,000 in a year
  
• Books of accounts must be maintained as per Section 44AA
  
• A tax audit is required if the turnover exceeds ₹1 crore (business) or ₹50 lakh (profession)
  
• Timely filing avoids interest, penalty, and disallowance of deductions