Partners Remuneration TDS

TDS on partners’ remuneration is now covered under Section 194T, applicable from FY 2025-26. A partnership firm/LLP has to deduct TDS @ 10% on salary, remuneration, commission, bonus or interest paid/credited to a partner if the aggregate amount to that partner exceeds ₹20,000 in the financial year.

TDS is to be deducted at the earlier of payment or credit, including credit to the partner’s capital/current account. Therefore, if remuneration is finalised only after year-end based on book profit, TDS should be deducted when the final remuneration/interest is credited or provided in the books. If remuneration is paid or credited monthly, then TDS should be deducted at that time itself.

For March credit/provision, TDS should generally be deposited by 30 April, and quarterly TDS return should be filed in Form 26Q. Also ensure that the remuneration is authorised by the partnership deed and within the limits of Section 40(b), because Section 194T is only for TDS compliance and does not automatically decide allowability of expenditure.