TDS 194-T applicability

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Section 194-T of the Income Tax Act applies to all firms and LLPs, regardless of whether they are subject to tax audit or their turnover. The key trigger is when payments like salary, commission, or interest to a partner exceed £20,000 annually, with a TDS rate of 10% applicable on the total amount. Importantly, a partner's share of profits and capital drawings are exempt from this provision. The discussion also addresses scenarios where TDS might not have been deducted due to oversight or a misunderstanding of its applicability to non-audited firms.

Subhash Jain

Subhash Jain (Querist)

24 September 2026 whether TDS 194-T is applicable to small partnership firms also , who is not covered under Tax Audit criteria ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

24 September 2026 Applicability: Section 194T applies to every firm/LLP, irrespective of tax audit status or turnover.

Condition: Triggered when salary, remuneration, commission, bonus, or interest to a partner exceeds ₹20,000/year.

TDS Rate: 10% on the total credited/paid amount.

Exemptions: Share of profits and capital drawings are excluded.

Subhash Jain

Subhash Jain (Querist)

24 September 2026 Thanks Sir,
but, what if not deducted in FY 2025-26 due to ignorance and no TAN and in the impression that TDS is applicable to Audited firms only ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

24 September 2026 non-deduction of TDS u/s 194T in FY 2025-26 can be regularized by immediately applying for a TAN, obtaining a CA-certified Form 26A confirming that the partners paid tax on the income, paying mandatory interest @ 1% per month u/s 201(1A), and filing the overdue Form 26Q to avoid expense disallowances u/s 40(a)(ia) and penalties u/s 271C

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