Tds
This query is : Resolved
Nikhil Kaushik
(Expert)
09 June 2014
as such no tds is applicable on partner's salary. but the partner has to pay the tax on his own.
09 June 2014
TDS not applicable.
Partner is not an employee of the firm. In CIT v. R M Chidambaram Pillai 1976 (11) TMI 2 - SUPREME Court, it was held that a contract of employment requires two distinct firms, viz., employer and employee. A firm is not a 'legal person,' though it has some attributes of a personality. In Income-tax law, a firm is a unit of assessment, by special provisions, but is not a full person. Salary paid to partner is only profit known by a different name. In strict law, there cannot be a contract of service between a firm and one of its partners, since contract of employment requires two distinct persons, viz., employer and employee. A man cannot be his own employer.
In Regional Director, Employees State Insurance Corporation v. Ramanuja Match Industries 1984 (11) TMI 316 - SUPREME COURT , it was held that a partner is not an 'employee' of the company. - [Also see Prakash D. Shah v. UOI 2003 (9) TMI 708 - BOMBAY HIGH COURT .
Explanation 2 to section 15 of the Income-tax Act, 1961 states that any salary, bonus, commission or remuneration, by whatever name called, due to or received by a partner of a firm from the firm shall not regarded as 'salary'. Further, section 28(v) of the Income Tax Act, 1961 states that such incomes received from firm shall be treated as income chargeable to tax under the head "Profits and Gains of business or profession."
Partner is not an employee of the firm. In CIT v. R M Chidambaram Pillai 1976 (11) TMI 2 - SUPREME Court, it was held that a contract of employment requires two distinct firms, viz., employer and employee. A firm is not a 'legal person,' though it has some attributes of a personality. In Income-tax law, a firm is a unit of assessment, by special provisions, but is not a full person. Salary paid to partner is only profit known by a different name. In strict law, there cannot be a contract of service between a firm and one of its partners, since contract of employment requires two distinct persons, viz., employer and employee. A man cannot be his own employer.
In Regional Director, Employees State Insurance Corporation v. Ramanuja Match Industries 1984 (11) TMI 316 - SUPREME COURT , it was held that a partner is not an 'employee' of the company. - [Also see Prakash D. Shah v. UOI 2003 (9) TMI 708 - BOMBAY HIGH COURT .
Explanation 2 to section 15 of the Income-tax Act, 1961 states that any salary, bonus, commission or remuneration, by whatever name called, due to or received by a partner of a firm from the firm shall not regarded as 'salary'. Further, section 28(v) of the Income Tax Act, 1961 states that such incomes received from firm shall be treated as income chargeable to tax under the head "Profits and Gains of business or profession."
10 June 2014
no tds is deducted while paying to partner.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- EPF ECR NEW FILE SEP 17TH 2026
- Capital Gail Exemption Certificate
- Oct 2025 Invoices
- Import of Software Service.
- SECTION 393(3) TAX ON CASH WITHDRAWAL
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- Under marginal scheme
- Capitalgain tax purposes for valuation report compulsory
- GST on Renting godown to KFCSC for Storage of Raagi
- GST Audit whether Govt Companies are exempt?
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
