Remuneration to Partners

Section 194T is applicable from 01.04.2025 for payments by a firm/LLP to its partners in the nature of salary, remuneration, commission, bonus or interest. TDS is to be deducted at 10% if the aggregate amount paid/credited to a partner exceeds ₹20,000 in a financial year. TDS is required at the time of credit to partner’s account, including capital/current account, or actual payment, whichever is earlier. 

For arriving at partner remuneration, the firm should still compute allowable remuneration as per partnership deed and Section 40(b) on the basis of book profit. Practically, the firm may pass provisional monthly/quarterly remuneration entries based on estimated profit and deduct TDS accordingly. At year-end/audit finalisation, the exact eligible remuneration can be finalised and any excess/short remuneration can be adjusted through partner current/capital accounts.

TDS under Section 194T is not on “profit share” exempt under section 10(2A). It applies only to specified payments like remuneration, salary, bonus, commission and interest to partners.

Sir

Thank you for ur valuable feedback 

Shashi kiran 

Section 194T is applicable from 1 April 2025.
Firms and LLPs must deduct 10% TDS on salary, remuneration, commission, bonus, or interest paid to partners if the total amount exceeds ₹20,000 in a year.

TDS should be filed in Form 26Q and will reflect in Form 26AS.
If PAN is not available, TDS will be deducted at 20% under Section 206AA.

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