Microlesson · 5-min read

Section 194T — Payment by Firm/LLP to Partners

# Section 194T — TDS on Salary, Remuneration, Commission, Bonus, Interest paid by Firm to Partner

(New section inserted by Finance (No. 2) Act, 2024 — applicable from 01.04.2025.)

## Who deducts?

Firm / LLP paying to a partner.

## Payments covered

Salary, remuneration, commission, bonus, interest on capital / loan.

## Threshold

Aggregate payments > ₹20,000 in a financial year.

## Rate

10%.

## Notes

Drawings/share of profit are NOT covered (share of profit is exempt u/s 10(2A)).
Aligns the tax treatment of partner payments with TDS framework.

Worked example

### Example 1

Example: Firm pays partner Mr. R ₹1,00,000 salary + ₹50,000 interest on capital. Aggregate ₹1,50,000 — TDS u/s 194T = 10% × ₹1,50,000 = ₹15,000.

Deducting on share of profit (exempt) — only salary, remuneration, commission, bonus, interest are covered.
Forgetting that 194T applies to every kind of firm including LLP.

Reference: 194T

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