State how the following incomes will be chargeable to tax and if taxable, also the head of income: Salary received by a person as working partner in a partnership firm.

Salary paid to a working partner by a firm is nothing but appropriation of profits. Any salary, bonus, commission, or remuneration by whatever name called due to or received by partner of a firm shall not be regarded as salary but has to be charged as income under the head Profit and Gains from Business & Profession u/s 28 of the Income Tax Act, 1961. It is because of the fact that the relationship between the firm and its partner is not of employer and employee. Salary to working partner is allowed as deduction to the Firm subject to Section 40(b) of the Income Tax Act, 1961 which in turn depends upon specified % of book profits. So, the amount of taxability in hands of the working partner depends upon deduction allowed to the firm. Therefore, the amount of salary taxable in hands of working partner shall be the amount allowed as deduction to the firm.