TDS on Salary & Interest to Partners from 1-4-2024 – u/s 194T
Query:
As TDS is to be deducted on payments to partners from 1-4-2024, my question is as follows:
- The salary of the partner is decided at the end of the year, depending on the firm’s income. Similarly, interest is credited to the partner’s account at the end of the year. However, payments to partners are made on an approximate on-account basis, against salary/interest on capital. How should TDS be deducted in such cases?
- Example:
- Annual salary = ₹18,00,000
- Interest on capital = ₹20,00,000
- Total amount the partner can withdraw = ₹38,00,000
However, the partner withdraws only ₹2,00,000 per month on account.
How should TDS be deducted in this scenario?
- Should TDS be deducted at 10% on the ₹2,00,000 withdrawn per month, which would be ₹20,000 every month?
- Or should it be deducted at the end of the year on the total amount of ₹38,00,000, i.e., 10% ₹3,80,000?
Additionally, if the partner withdraws an amount against the profit share of the previous year, do we need to deduct TDS on that amount? Since the profit share is after income tax payment, should TDS still be applicable?
Please guide.
CAclubindia
