Till today, there are no liability of TDS on Partnership Remuneration. in a nutshell, it can be said that if a partner draw remuneration from firm or if he is taking payments in the form of interest, bonus or commission then the TDS provisions were not applicable on the said payments.
In the Budget 2024, a new Section 194T was inserted which will become operative from April 1 2025, certain payments made to partners will be subject to TDS.
The following payments by a firm to a partner are covered in Section 194T:
- Salary
- Remuneration
- Commission
- Bonus
- Interest on any account (It can be on a loan account or on a capital account)
Rate of TDS:
The TDS need to be deducted @ 10% where the aggregate payment by way of salary , remuneration, commission, bonus or interest exceeds Rs. 20000/- ( Rs. Twenty Thousand only) in a year.
The rules for deduction of tax at source will be same as in all cases i,e the date of credit or date of payment whichever is earlier to be followed. The date of Credit will be treated as the date on which the capital account of the partner is credited by way of the above sums.
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