Notifications Parliament of India
Section 194T — TDS on Partner Remuneration at 10% (w.e.f. 01-Apr-2025)
Finance Act 2024 — Section 194T (new insertion)
- Issued
- 2024-07-23
- Effective from
- 2025-04-01
- Act
- Income Tax Act 1961
What it says
Who must deduct
A partnership firm (including LLP) paying remuneration, bonus, commission, or interest on capital to a resident partner.
Rate and threshold
10% TDS on the aggregate of remuneration + interest on capital paid to each partner, when total exceeds ₹20,000 in the FY.
Types of payments covered
Salary/remuneration to working partner (s.40(b)), interest on partner's capital account, bonus, commission — all qualifying payments to partners.
Effective date: 01 April 2025
First applicable for payments made on or after 01-Apr-2025 (FY 2025-26 / AY 2026-27). No grandfathering for pre-2025 balances.
PAN of partner required
If partner does not provide PAN, TDS is deducted at 20% (higher withholding rate under s.206AA).
Affected forms and returns
- Form 26Q (quarterly TDS return)
- Form 16A
- Partner's ITR — s.194T TDS credit
Whether s.194T applies to interest on loans given by a partner to the firm (distinct from interest on capital account) — s.194T covers interest on 'capital' specifically; interest on a loan (as a creditor, not a partner's capital contribution) may not be covered. Confirm with CA for your specific partnership deed structure.
Primary source
Finance Act 2024 — Section 194T (new insertion) — issued by Parliament of India under Income Tax Act 1961
View official notification ↗