Section 194T: New TDS Rules on Payments To Partners Of A Firm

Mitali | Last updated: 30 October 2025

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A new provision, Section 194T, is being introduced to the Income Tax Act, effective from April 1, 2025. This section mandates Tax Deducted at Source (TDS) on payments made by partnership firms and LLPs to their partners, including remuneration, interest, and commission. Previously, such payments were not subject to TDS. The TDS will apply if the total payment to a partner exceeds £20,000 in a financial year, with a deduction rate of 10%.

Section 194T is a newly inserted for TDS deduction proposed as per Clause 62 of Finance (No. 2) Bill, 2024. The scope of TDS u/s 194T is to include payment made by firms to its partners. Earlier, TDS was not applicable on partner’s remuneration, interest, commission etc. However, TDS was applica

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About the Author

Mitali

Finance Professional

I write about Income Tax, GST, TDS, RBI updates, government schemes, and personal finance in India. My focus is on simplifying complex tax and compliance topics into easy-to-understand guides that help readers stay updated with the latest financial rules, investment options, and regulatory changes.

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