{"id":481,"date":"2024-08-10T13:20:00","date_gmt":"2024-08-10T07:50:00","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=481"},"modified":"2025-07-14T18:15:15","modified_gmt":"2025-07-14T12:45:15","slug":"section-194t","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/section-194t\/","title":{"rendered":"Section 194T: New TDS Rules on Payments To Partners Of A Firm"},"content":{"rendered":"\n<p>Section 194T is a newly inserted for TDS deduction proposed as per Clause 62 of Finance (No. 2) Bill, 2024. The scope of TDS u\/s 194T is to include payment made by firms to its partners.<\/p>\n\n\n\n<p>Earlier, TDS was not applicable on partner\u2019s remuneration, interest, commission etc. However, TDS was applicable on payment made to employees by firms.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Effective_Date\" >Effective Date<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Applicability\" >Applicability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Non_Applicability\" >Non Applicability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Threshold_Limit\" >Threshold Limit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Rate_of_TDS_under_Section_194T\" >Rate of TDS under Section 194T<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#For_Example\" >For Example<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Timing_of_TDS_Deduction_us_194T\" >Timing of TDS Deduction u\/s 194T<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#Is_TDS_us_194T_applicable_to_LLP\" >Is TDS u\/s 194T applicable to LLP?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194t\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Effective_Date\"><\/span>Effective Date<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The provisions of <a href=\"https:\/\/www.caclubindia.com\/news\/budget-2024-25-new-tds-section-194t-proposed-for-partner-payments-in-partnership-firms-starting-1st-april-2025-23595.asp\"><strong>Section 194T<\/strong><\/a> will be applicable from 1st April, 2025.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability\"><\/span>Applicability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 194T applies to payments made to partners of a Firm, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Salary<\/li>\n\n\n\n<li>Bonus<\/li>\n\n\n\n<li>Commission<\/li>\n\n\n\n<li>Interest on loan from partner<\/li>\n\n\n\n<li>Remuneration<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non_Applicability\"><\/span>Non Applicability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 194T is not applicable to payments made to partners of a Firm if it is for:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Capital Repayment<\/li>\n\n\n\n<li>Drawing<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Threshold_Limit\"><\/span>Threshold Limit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>TDS u\/s 194T will be applicable only if the aggregate amount paid to a partner in a financial year exceeds Rs. 20,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rate_of_TDS_under_Section_194T\"><\/span>Rate of TDS under Section 194T<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>TDS Rate is 10%.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_Example\"><\/span>For Example<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If a partnership firm pays Rs. 4, 00,000 as remuneration to a partner in a financial year.<br>Then, The TDS u\/s 194T would be (Rs. 4, 00,000 @ 10%) = Rs. 40,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Timing_of_TDS_Deduction_us_194T\"><\/span>Timing of TDS Deduction u\/s 194T<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to section 194T , TDS should be deducted at the earlier of the following two dates:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>At the time of credit to the account of the partner.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>At the time of payment whether in cash, online transfer, draft, cheque or any other manner.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_TDS_us_194T_applicable_to_LLP\"><\/span>Is TDS u\/s 194T applicable to LLP?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Yes, <strong><a href=\"https:\/\/www.caclubindia.com\/articles\/new-tds-section-194t-52226.asp\">section 194T<\/a><\/strong> is applicable to firm, including partnership firm and LLPs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1723274547753\"><strong class=\"schema-faq-question\">What can be the impact of TDS u\/s 194T on firms?<\/strong> <p class=\"schema-faq-answer\">It will increase the compliance burden and expenses.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1723274566657\"><strong class=\"schema-faq-question\">What are the changes introduced in Budget 2024 regarding TDS?<\/strong> <p class=\"schema-faq-answer\">Budget 2024 introduce a new provision under Section 194T of the Income Tax Act, which states that payments made by a partnership firm or LLP to its partners will now be subject to TDS.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1723275594056\"><strong class=\"schema-faq-question\">From when the provisions of Section 194T be applicable?<\/strong> <p class=\"schema-faq-answer\">The provisions of Section 194T will come into effect from April 1, 2025.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Section 194T is a newly inserted for TDS deduction proposed as per Clause 62 of Finance (No. 2) Bill, 2024. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":482,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-481","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Section 194T: New TDS Rules on Payments To Partners Of A Firm - Tax Guide<\/title>\r\n<meta name=\"description\" content=\"Section 194T newly inserted for payment made by firms to its partners. 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