ITDS U/S.194T of Firm

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This discussion clarifies whether a partnership firm declaring income under Section 44AD is required to deduct Tax Deducted at Source (TDS) on partner remuneration under Section 194T. Since Section 44AD disallows partner remuneration as a deductible expense, it's not taxable for partners, thus negating the need for TDS. The query also touches upon whether remuneration can still be recorded in the firm's books even if not claimed as an expense.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

05 September 2026 If I declare income of a partnership firm U/S.44AD, whether ITDS on remuneration to partners is compulsory u/s.194T ?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

05 September 2026 If a partnership firm opts for Section 44AD, it does not claim partner remuneration as a deductible expense. Consequently, this remuneration is not taxable in the hands of the partners under Section 28(v). Because the payment does not constitute taxable income for the recipient, the firm is not required to deduct TDS under Section 194T.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

05 September 2026 If income is declared u/s 44AD without claiming expenses of remuneration to partners. But, in actual books of account, can we provide remunerations to partners (in their individual file) ?

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