TDS on Partner Remuneration

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1 Points Joined July 2017

IF PARTNERSHIP FIRM IS NOT LIABLE TO DEDUCT TDS OF ANY PERSON THEN ALSO IT IS MANDATORY TO DEDUCT TDS ON REMUNERATION PAID TO PARTNER?

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On 03 March 2025 at 09:24 Report
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Master in Accounts & high court Advocate
9447 Points Joined December 2011

As per the Income Tax Act, 1961, a partnership firm is required to deduct TDS on remuneration paid to its partners, even if the firm is not liable to deduct TDS on payments made to other persons. TDS on Partner's Remuneration: - *Section 194A*: Not applicable, as it deals with TDS on interest payments. - *Section 194C*: Not applicable, as it deals with TDS on contract payments. - *Section 194J*: Applicable, as it deals with TDS on professional fees, technical fees, and remuneration paid to partners. Partner's Remuneration: - *Definition*: Remuneration includes any payment made to a partner for services rendered, including salaries, commissions, and bonuses. - *TDS rate*: The TDS rate on partner's remuneration is 5% (Section 194J). Important Points: - *TDS applicability*: TDS is applicable on remuneration paid to partners, regardless of the firm's TDS liability on other payments. - *Threshold limit*: There is no threshold limit for TDS on partner's remuneration. - *Quarterly TDS returns*: The partnership firm must file quarterly TDS returns (Form 26Q) to report the TDS deducted on partner's remuneration.

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On 03 March 2025 at 09:45
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Fellow CA
86871 Points Joined June 2009

It would really help if you give succinct and correct replies to the queries here. Long but irrelevant responses do not help anyone. 

Rachit, as of now no TDS section applies to payments made to the partners. However, starting 1 April 2025, section 194T of the Income-tax Act shall apply. 

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On 03 March 2025 at 20:15


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