Tds on interest to partner

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Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2016 TDS on interest on capital paid to partner is not liable to TDS under section 194A. My question is whether TDS is to be deducted in case the partner has given a loan to the partnership firm and interest is paid by partnership firm?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 February 2016 No need of deduction per section 194A(3)(iv).

Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2016 Even in case its interest on loan not capital?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Great question! Here’s the clarity:

* **Interest on capital paid to a partner by the firm** — **No TDS** under **Section 194A(3)(iv)**.
* **Interest on loan given by a partner to the firm** — also **No TDS** under **Section 194A(3)(iv)**.

So, **whether it’s interest on capital or interest on loan from partner to firm, no TDS deduction is required** as per Income Tax law.

This exemption is specific to payments made by the partnership firm to its partners on capital or loans provided by them.

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