Budget 2024-25: New TDS Section 194T Proposed in Partnership Firms Starting 1st April 2025

Last updated: 23 July 2024

Quick Summary
The upcoming Budget 2024-25 proposes a new TDS (Tax Deducted at Source) rule, Section 194T, affecting partnership firms. From 1st April 2025, firms will be required to deduct tax on payments made to partners, including salary, remuneration, interest, bonus, or commission. This applies to aggregate payments exceeding £20,000 in a financial year, with a TDS rate of 10%.

TDS on payment of salary, remuneration, interest, bonus or commission by partnership firm to partners 

Presently there is no provision for deduction of tax at source (TDS) on payment of salary, remuneration, interest, bonus, or commission to partners by the partnership firm. Hence, it is proposed that a new TDS section 194T may be inserted to bring payments such as salary, remuneration, commission, bonus and interest to any account (including capital account) of the partner of the firm under the purview of TDS for aggregate amounts more than Rs 20,000 in the financial year. Applicable TDS rate will be 10%.

Budget 2024-25: New TDS on Partnership Firm Payments from April 2025

2. The provisions of section 194T of the Act will take effect from the 1st day of April, 2025.

FAQ :

A new TDS section, 194T, is proposed to be inserted, requiring partnership firms to deduct tax at source on payments made to partners.

The provisions of the new Section 194T will take effect from the 1st day of April, 2025.

Payments such as salary, remuneration, interest, bonus, or commission made to any account (including capital account) of a partner will be subject to TDS.

TDS will be applicable for aggregate amounts exceeding £20,000 in a financial year.

The applicable TDS rate will be 10%.



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