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.
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