Clarification regarding TDS on Commission to a partner under section 194H read with section 40(b)

Issue/Justification

In case of partnership firms, Section 40(b)(i) provides that “remuneration” shall mean any payment of salary, bonus, commission or remuneration by whatever name called. Considering a partner and partnership firm as one entity, the provisions of tax deduction at source under section 192 have not been made applicable on payment of such remuneration, as the same is not taxable under the head “Salaries”. Also, the provisions of TDS under section 194A are not applicable to interest (other than interest on securities) credited or paid by a firm to a partner of the firm.

Section 194H provides for tax deduction at source in respect of commission or  brokerage. On the lines of section 192 and 194A, there is a need to clarify that Commission paid by the Partnership firm to its partners would not be liable to Tax deduction at source under section 194H.

Suggestion

On the lines of the provision of section 194A, section 194H be amended to provide that Commission paid by the Partnership firm to its partners would not be liable to Tax deducted at source under section 194H.

(SUGGESTIONS TO REDUCE / MINIMIZE LITIGATIONS)

Source-  ICAI Pre- Budget Memorandum–2018 (Direct Taxes and International Tax)

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Category : Income Tax (28265)
Type : News (13925)
Tags : Budget (1957) ICAI (2714)

One response to “Exempt TDS on Commission to partner from TDS deduction U/s. 194H: ICAI”

  1. SUHEL AHMAD says:

    Reg Sec 80DD of Income Tax Act:
    Please refer Sub Section (1)(b) which is reproduced as “aid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability,”

    I have come to know that Insurance Compnies ie LIC etc have no Insurance Policy in this regard.
    Please advise.

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