Tds applicability

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Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2012 Expert,
whether tds will be apply in case of payments of remuneration to partner?

Ca Anand Dubey

Ca Anand Dubey (Expert)
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19 June 2012 no tds on remuneration to partners

Querist : Anonymous

Querist : Anonymous (Querist)

20 June 2012 where it is written?

Ca Anand Dubey

Ca Anand Dubey (Expert)
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21 June 2012 It is not written anywhere you can deduct .O.K.

Querist : Anonymous

Querist : Anonymous (Querist)

22 June 2012 Dubey sir, don't be angry....

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Great question!

### ✅ **Short Answer:**

**No, TDS is *not applicable*** on **remuneration paid to a partner** by the partnership firm.

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### 🔍 **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**.

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### 🔒 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.

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### ✅ 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".

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### ✅ 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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