New TDS Rule for Partnership Firms & LLPs – Section 194T

New TDS Rule for Partnership Firms & LLPs – Section 194T

New TDS Rule for Partnership Firms & LLPs – Section 194T

Important Tax Update

From April 1, 2025, Section 194T of the Income Tax Act introduces Tax Deducted at Source (TDS) on payments made by partnership firms and LLPs to their partners.

 Key Provisions:
1. Applicable to: Partnership Firms & LLPs
2. TDS Applies to: Salary, Remuneration, Commission, Bonus, Interest
3. Threshold: Payments exceeding ₹20,000 in a financial year
4. TDS Rate: 10% on the amount exceeding ₹20,000

Why This Change?
This amendment ensures better tax compliance and prevents underreporting of income from firms to partners.

 What Firms Need to Do:
1. Deduct TDS at the time of payment or credit (whichever is earlier)
2. Deposit the deducted amount within the prescribed timelines
3. Accurately report transactions in quarterly TDS returns (Forms 26Q & 27Q)

Non-compliance may attract penalties and interest charges. Ensure your accounting and tax processes are updated accordingly.

Stay informed, stay compliant!