Compliance of Section 194T of Income Tax Act 1961 for A.Y. 2026-27


nitinguptafca@gmail.com +91-9810777398


	Home About Us Gallery Blog Professional Opportunity Calculators GST MRP Calculator GST Rate Calculator GST Calculator Tax Calculator TDS Calculator Calculate Net Profit Calculate Net Worth Effective Capital HRA NSC EMI Auto Loan Calculator Home Loan Calculator Get No. Of Installment RERA Calculator Developers Calculator Home Buyer Delay Interest Home Buyer Refund Bulletins RBI SEBI Notification Circular Income Tax Service Tax Central Sales Tax Excise Matters Customs Company Law Labour Laws FEMA The LLP Act 2008 Accounting Standard (INDAS) Others GST VAT Delhi VAT Maharastra VAT Gujarat VAT Telangana VAT Tamil Nadu VAT IGST UTGST Compensation Cess IBC Regulation Utilities Rates of TDS TDS Rates for N.R.I us 195 Rates of Income Tax Depreciation Rates Companies Act Depreciation Rates Income Tax Act ROC Filing Fees (Cos Act, 2013) ROC Fee Structure (Cos Act, 2013) Cost Inflation Index IFSC Codes MICR Codes Rates of NSC Interest Gold and Silver Rates Rates of Stamp Duty LLP Fees National Industries Classification HSN Rate List Deduction u/s 80TTA Vs 80TTB Links Quick Links Important Links GST/VAT Links Ease Of Doing Business Acts Direct Tax Income Tax Act Wealth Tax Act Income Declaration Scheme 2016 Income Tax 2025 Indirect Tax Service Tax(Finance Act, 1994) Central Sales Tax Act, 1956 The Central Excise Act, 1944 Customs Act, 1962 Entry Tax Act Corporate Laws Companies Act, 2013 Companies Act, 1956 LLP ACT SEBI Act, 1992 VAT Laws Delhi Value Added Tax Act, 2004 MVAT Act, 2002 West Bengal VAT Act, 2003 Tamilnadu VAT ACT, 2006 Karnataka Value Added Tax Act, 2003 Gujarat Value Added Tax Act, 2003 UP VAT Act, 2008 Rajasthan Value Added Tax Act, 2003 Punjab Value Added Tax Act Haryana Value Added Tax Act Telangana VAT Act 2005 Andhra Pradesh VAT Act, 2005 Bihar Value Added Tax Act, 2005 Other Statutes ESI Act, 1948 PF Act, 1952 Profession Tax Act The Indian Partnership Act, 1932 Societies Registration Act, 1860 Competition Act, 2002 Reserve Bank of India Act, 1934 MRTP Act, 1969 Equalisation Levy Act, 2016 Right To Information Act, 2005 FEMA, 1999 Maharashtra RERA RERA, 2016 Insolvency & Bankruptcy Code, 2016 Benami Property Act 1988 GST Laws IGST Act , 2017 CGST Tax Act, 2017 UTGST Act, 2017 GST (Compensation to States) Act Rules Direct Tax Rules Income Tax Rules Wealth Tax Rules 1957 Income Declaration Scheme Rules 2016 Indirect Tax Rules GST Valuation Rules , 2016 Service Tax Rules CST (Delhi) Rules, 2005 CST (Maharashtra) Rules Customs Valuation Rules Cenvat Credit Rules, 2017 Entry Tax Rules Corporate Laws Rules Companies Rules, 2014 LLP Rules, 2009 LLP Winding up Rules, 2012 Cos Unpaid Dividend Rules, 1978 VAT Laws Rules Delhi VAT Rules, 2005 Maharashtra VAT Rules, 2005 West Bengal VAT Rules, 2005 Tamilnadu VAT Rules, 2007 Karnataka VAT Rules, 2005 Gujarat VAT Rules, 2006 Uttar Pradesh VAT Rules, 2008 Rajasthan VAT Rules, 2006 Punjab VAT Rules Haryana VAT Rules, 2003 Telangana VAT Rules 2005 Andhra Pradesh VAT Rules, 2005 Bihar Value Added Tax Rules, 2005 Other Statutes Profession Tax Rules NBFC Deposits Directions, 1998 NBFC & Misc NBC (Advt) Rules, 1977 NBFC Auditor Report Directions, 2008 Delhi Labour Welfare Fund Rules, 1997 Cost records and audit Rules, 2014 Baggage Rules, 2016 Equalisation Levy Rules, 2016 NCLT And NCLAT Rules Insolvency & Bankruptcy Rules Benami Property Rules, 2016 GST Rules CGST Rules, 2017 IGST Rules 2017 Forms Income Tax Forms ROC Forms (Cos Act, 2013) ROC Forms (Cos Act, 1956) Income Declaration Forms Wealth Tax Forms Service Tax Forms Companies Unpaid Dividend Forms NBFCs Forms LLP Winding up FEMA Forms LLP Forms CGST Forms Accounts and Records GST Forms Advance Ruling Appeals and Revision Assessment and Audit Composition Demands and Recovery Input Tax Credit Inspection, Search and Seizure Offences and Penalties Payment of Tax Refund Registration Returns Transitional Provisions Contact Us


	Blog Categories All Audit & Accounts (3) GST (13) Income Tax (6) MCA UPDATE (2) Compliance of Section 194T of Income Tax Act 1961 for A.Y. 2026-27 Category: Income Tax, Posted on: 23/04/2026 , Posted By: CA Nitin Gupta Visitor Count:1955 Professional Update by CA Gupta Nitin Ghaziabad Respected Members Greetings of the day! Compliance of Section 194T of Income Tax Act 1961 for A.Y. 2026-27 Section 194T: TDS on Payment by Partnership Firm to Partners Section 194T of the Income Tax Act has been introduced to regulate tax deduction on payments made by firms or LLPs to their partners. It covers various forms of partner income, including salary, interest, commission, bonus, and remuneration. This provision aims to ensure better compliance and bring greater transparency in partnership taxation. Key Highlights Threshold limit: No TDS if aggregate payment to a partner does not exceed Rs.20,000 in a financial year. Timing of deduction: TDS is deducted at the earliest of credit to the partner’s account or actual payment. Withdrawals from a partner’s capital account are not subject to TDS What is Section 194T of Income Tax Act? Section 194T, introduced in Budget 2024, marks a significant shift in partnership taxation. Effective from 1st April 2025, payments such as salary, remuneration, interest, commission, or bonus made by firms and LLPs to their partners will be subject to TDS. Earlier, such payments were outside the scope of TDS, which applied only to employee salaries. Under this provision, firms and LLPs must deduct TDS at 10% if the total payment to a partner exceeds Rs.20,000 in a financial year. No TDS is required when the aggregate payment during the year does not cross this threshold. Applicability of Section 194T of Income Tax Act The following payments by a firm to a partner are covered in Section 194T: Salary Remuneration Commission Bonus or Interest on any account (It can be on a loan account or on a capital account). Rate of Deduction of TDS and Limit for Section 194T The rate at which TDS is to be deducted is 10%. The TDS is to be deducted only in the cases where the aggregate payments to a partner exceeds Rs. 20,000 in a financial year. When to Deduct TDS under Section 194T? The TDS is to be deducted at earlier of the following dates: Credit of sum/payment to the account of partner in the books of the firm or Payment to the partner Note: Credit to the partner’s capital account will also be considered for determining the date in (1) above. Practical Implications Due to Insertion of Section 194T Withdrawals from Capital Account Balance Any payment to partner in nature of salary, interest, bonus, commission, or remuneration which is credited to partner's capital account, is also subject to TDS u/s 194T. But withdrawals from capital account of the partner is not subject to TDS u/s 194T. Closure of Books of Accounts There can be a situation where the remuneration of the partner depends on the profitability of the firm. In such cases, profits are determined once the books of the firm are closed for the financial year. Since the due date for TDS payment for the month of March is April 30th, the firm may need to close its books of accounts before this date. The applicable TDS on remuneration should be recorded in the books and deposited with the government within the prescribed timeline. Conclusion The introduction of Section 194T will now require partners to plan their finances as the applicability of TDS will impact their cashflows. This brings a significant amendment to the Income Tax Act by increasing tax compliance for firms and partners. With Warm Regards CA. Nitin Gupta B.Com, FCA, DISA, DIRM, DITL Chairman CICASA CIRC (2026-27) Regional Council Member CIRC (2022-2029) Secretary CIRC of ICAI (2024-2025) Vice Chairman CIRC of ICAI (2023-2024) III-B-1, Ist Floor, Nehru Nagar, Near Holi Child School, Ghaziabad- 201001 Mob. 9810777398, 8287477398 Email: nitinguptafca@gmail.com Disclaimer: The content of the blog does not create any responsibility of the firm / its authorized persons whose website is being accessed. The blog is not for legal use. Kindly verify the correctness of data/contents from your own sources. This is only for information purpose. To Activate comments you need to provide details for google authentication and facebook authentication

44135 Times Visited