Q4 Tax Alert for Partnership Firms: Section 194T Makes Partner Remuneration Planning a Year-End Priority !
Q4 Tax Alert for Partnership Firms: Section 194T Makes Partner Remuneration Planning a Year-End Priority With the fourth quarter of FY 2025-26 underway , businesses must now actively focus on tax planning, profitability review, and compliance readiness . Unlike earlier years, partner remuneration and interest on capital can no longer be treated as last-minute withdrawals due to the introduction of TDS under Section 194T . This change shifts partnership taxation toward a disciplined, real-time compliance framework . Why Q4 Planning Has Become Critical From 1 April 2025 , any remuneration, bonus, commission, or interest paid to partners attracts TDS at 10% once the annual threshold of ₹20,000 per partner is crossed. TDS must be deducted at the time of credit or payment, whichever is earlier . Therefore, delaying remuneration decisions to March-end may now lead to interest, late fees, and compliance pressure . Reference: Section 194T, Income-tax Act 1961 (inserted by Fi...