Section 194T is introduced for TDS on payments made by firms to their partners.
Under this provision, any payment made to a partner; whether it is salary, bonus, commission, interest, or remuneration will be subject to a TDS rate of 10% if the total amount paid within a financial year exceeds ₹20,000
If the total payments made to a partner exceed this threshold, TDS must be deducted on the entire amount, not just the excess over Rs. 20,000.
It is important to note that the threshold limit applies to the aggregate of all payments made to a partner. Even if a single payment does not exceed Rs. 20,000, TDS must be deducted if the total payments to the partner for the year exceed the threshold.
TDS is to be deducted earlier of payment to the partner or sum credited to the account of partner in books whichever is earlier.
The provisions of section 194T of the Act will take effect from the 1st day of April, 2025.