08-Aug-2024 TDS on partner’s remuneration introduced in the Budget 2024 on 23rd July, 2024

Introduction:
1. Budget 2024 proposes a deduction of TDS @ 10% on payment by a partnership firm or a LLP to
their partners, which may be in form of Salary or remuneration or commission or bonus or interest,
when the aggregate amount exceeds Rs. 20,000 in a financial year.
 

2. Relevant Section for the same is Sec 194T.
 

Provisions:
1. Payments covered for TDS purpose in form of Salary, Remuneration, Commission, Bonus and
Interest. TDS is applicable only when the aggregate amount in a financial year exceeds Rs. 20,000.
 

2. Applicable rate of TDS is 10% TDS shall be deducted at the time of payment of credit, whichever is
earlier.
 

3. The provision of this section 194T shall be applicable from 1st April, 2025. (AY 2025-2026) that
means from FY 2024-25.
 

4. Salary to partner does not mean salary covered under section 192 of the Income Tax Act. Hence
TDS under 192 shall not be deducted in this case.
 

Challenges:
1. For the fixed remuneration the calculation is easy, however where the remuneration is decided in
the end (at the time of closure of books) based upon the profitability, it will be a bit complex task.
 

2. It also draws the additional compliance needs and possible liquidity challenges for firms and their
partners.
 

3. It requires firms to prepare by setting effective systems and processes, getting TAN, and ensuring
timely TDS deductions and deposits.
 

4. The provision is applicable for the remuneration credit/payments made to partners from 1st April
2024 onwards. Any payment/credit of Remuneration, Commission, Interest to partners ledger
account is subject to 10% TDS. Since the amendment proposed is on 23rd July, 2024. We strongly
recommend to calculate TDS liability and pay it after Bill is passed by the parliament and president
gives consent.

Please contact us at +91 82912 78383 for any clarification or write to us at kinjal@apmh.in.