With effect from 1 April 2025 (FY 2025–26), Section 194T introduces a new tax withholding obligation for partnership firms and LLPs. Under this provision, firms must deduct tax at source at the rate of 10% on payments made to partners towards interest, salary, commission, bonus, or other remuneration, where the aggregate annual payment to a partner exceeds ₹20,000. The obligation to deduct TDS arises at the earlier of credit to the partner’s account, including provision entries, or actual payment. Once deducted, the tax must be deposited with the government by the 7th day of the following month. Firms are also required to file quarterly TDS returns in Form 26Q, with the return for the January–March 2026 quarter due by 15 May 2026. Thereafter, TDS certificates in Form 16A must be issued to partners within 15 days of filing the return. The provision significantly expands compliance responsibilities for partnership entities.
CA IP TULI: NEW LIABILITY OF DEDUCTING TDS ON PARTNERSHIP FIRMS W.E.F. F.Y. 2025-26 note dated: 23.12.2025
Under Section 194T (effective 1 April 2025), firms/LLPs must deduct 10% TDS on payments of interest, salary, commission, bonus, or remuneration to partners if the annual payment exceeds ₹20,000. TDS must be deducted at the earlier of credit or payment.
1. Compliance Calendar for Section 194T (FY 2025–26)
Deduction Remuneration/Interest to partners:
- Event: Deduct 10% TDS on partner remuneration/interest.
- Timing: At the time of credit (including provision entry) or payment, whichever is earlier.
- Example: If provision is made on 31 March 2026, TDS must be deducted on that date.
2. Deposit of TDS
- Deadline: 7th of the following month.
- Example:
- TDS deducted on 31 March 2026 (year-end provision) → deposit by 7 April 2026.
3. Quarterly TDS Returns (Form 26Q)
- Q4 (Jan–Mar 2026): Due 15 May 2026
4. Issue of TDS Certificates (Form 16A)
- Deadline: Within 15 days of filing Form 26Q.
- Example:
- For Q4 return filed by 15 May 2026 → Form 16A by 30 May 2026.
Summary Table
| Compliance Step | Timeline | Example (FY 2025–26) |
| Deduct TDS | At credit/payment | 31 Mar 2026 (provision) |
| Deposit TDS | 7th of next month | 7 Apr 2026 |
| File Form 26Q | Quarterly | Q4 due 15 May 2026 |
| Issue Form 16A | 15 days after return | 30 May 2026 |
Author Bio
Good information.. But like to bring to notice that due date of payment of tds is 30th April (for non-government) not 7th April for Q4.
The TDS deducted on 31st March is to be paid on or before 30th April and not on 7th April