TDS applicability on Interest on Capital to Partners.
This query is : Resolved
02 July 2025
Sir,
After the inorporation of new section 194T of income tax act 1961, I want to clarify TDS applicability in respect of the following transactions.
1. Interest on Capital Rs. 1,50,000 paid to Mr. A (Resident partner)
2. Interest on Capital of Rs. 2,25,000 paid to Mr. B (Non Resident Partner)
3. Interest on Loan of Rs. 3,05,000 paid to Mr. C (Resident Partner)
Here, which TDS sections was applicable. Need clarification whether 194T, 195 or 194A?
After the inorporation of new section 194T of income tax act 1961, I want to clarify TDS applicability in respect of the following transactions.
1. Interest on Capital Rs. 1,50,000 paid to Mr. A (Resident partner)
2. Interest on Capital of Rs. 2,25,000 paid to Mr. B (Non Resident Partner)
3. Interest on Loan of Rs. 3,05,000 paid to Mr. C (Resident Partner)
Here, which TDS sections was applicable. Need clarification whether 194T, 195 or 194A?
10 July 2025
Hello
Section 194T is applicable on payments to partners in whatever nomenclature - Salary, Remuneration, Commission, Bonus interest . So TDS is applicable under section 194T. The intention of this specific provision is to curtail the year end profit adjustments. Also check partnership deed to check remuneration and interest payable to partneres if any (so that it should not contradict with actuals. Now my opinion on your queries
1 Section 194T ressident partner
3 Section 194T ressident partner
2. Section 194T is silent whether partner is ressident or non ressident so below are scenarios
If he has no PAN in india - 20% TDS
if he has pan in india i feel tax to be deducted under section 195 (194A is not applicable in this case) I am more biased towards section 195 instead section 194T in this case. But again refer to the partnership deed
Section 194T is applicable on payments to partners in whatever nomenclature - Salary, Remuneration, Commission, Bonus interest . So TDS is applicable under section 194T. The intention of this specific provision is to curtail the year end profit adjustments. Also check partnership deed to check remuneration and interest payable to partneres if any (so that it should not contradict with actuals. Now my opinion on your queries
1 Section 194T ressident partner
3 Section 194T ressident partner
2. Section 194T is silent whether partner is ressident or non ressident so below are scenarios
If he has no PAN in india - 20% TDS
if he has pan in india i feel tax to be deducted under section 195 (194A is not applicable in this case) I am more biased towards section 195 instead section 194T in this case. But again refer to the partnership deed
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
- Refund Annexure-B
- House Property Reporting in ITR
- TDS Claim year
- Liable to deduct tds and 44ADA
- Refund of 20%pre-deposit paid for stay application
- TDS Challan Code
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- CCFS 2026 Schemed
- Entries in AIS regarding sale of units and shares
- Rent lease agreement
- REGARDING SECTION 44AE
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
