§ 326
Chapter XVII — Special Provisions Relating To Certain Persons
Assessment when section 325 not complied with
Income-tax Act, 2025
If a partnership fails to meet the requirements of Section 325 for a tax year, it cannot claim any deduction for interest, salary, bonus, commission or other remuneration paid to its partners when calculating taxable business income.
Additionally, those payments are not taxable in the hands of the partners under the income‑tax provisions.
📜 Official text of the section +
326. Irrespective of anything contained in any other provision of this Act, where
a firm does not comply with the provisions of section 325 for any tax year,—
( a) no deduction by way of any payment of interest, salary, bonus, commission
or remuneration, by whatever name called, made by such firm to any
partner of such firm shall be allowed in computing its income chargeable
under the head “Profits and gains of business or profession”; and
( b) such interest, salary, bonus, commission or remuneration shall not be
chargeable to income-tax under section 26(2)(g) in the hands of partners
of such firm.
15.—Change in constitution, succession and dissolution
Change in constitution of a firm.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.