Tds applicability
Querist : Anonymous
whether tds will be apply in case of payments of remuneration to partner?
Querist : Anonymous
Querist : Anonymous
### ✅ **Short Answer:**
**No, TDS is *not applicable*** on **remuneration paid to a partner** by the partnership firm.
---
### 🔍 **Explanation:**
As per **Income Tax Act**, especially:
### 📘 **Section 40(b)**:
It specifically deals with payments to partners by a **partnership firm**, such as:
* Remuneration (salary, bonus, commission)
* Interest on capital
These payments are **allowed as deductions** in the hands of the firm **subject to certain limits**.
But most importantly:
### ❌ **TDS is *not* required** to be deducted by the firm **on such payments to partners**.
Why?
Because:
> A partner and the firm are **not separate legal entities** under the Income Tax Act. Hence, **you can’t deduct TDS when paying yourself**.
---
### 🔒 CBDT Clarification:
CBDT and judicial rulings have consistently held that **TDS provisions do not apply** on payments of salary/remuneration/interest to partners by the firm.
---
### ✅ Example:
If your firm pays ₹1,00,000 as **remuneration** to Partner A:
* **No TDS** needs to be deducted under Section 192, 194J, or any other section.
* The firm can claim deduction under **Section 40(b)** (subject to limits).
* The **partner must offer this income** under **"Business or Profession" head**, not "Salaries".
---
### ✅ Final Answer:
**TDS is NOT applicable** on **remuneration paid to partners** by a **partnership firm**, as per **Section 40(b)** and judicial interpretation.
Let me know if you're dealing with an LLP — there’s a similar treatment with minor nuances.
Click here to login now
Similar Resolved Queries
- About TDS & Income Tax
- Section 194JA & JB Income which ITR Form to use
- Pass word to open justification report for Q1 for FY 2026-27
- PPF interest-As Exempt Income disclosure
- Under construction property in ITR
- Scrutiny and reopening of past returns
- Booth for sales promotion
- Upload Level ValidationITR3Category of Defect B/D
- Building tax payment deduction in rental Income
- F & O PROFIT REPORTING FOR AY 2026-27
- Difference in GSTR3B system generated which is correct and actual Payment it asks
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Taxation in the hands of Landowner under JDA
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
