Section 194T of the Income-tax Act 1961, inserted by the Finance (No. 2) Act 2024 with effect from 1 April 2025, requires a firm or LLP to deduct TDS at 10% on salary, remuneration, commission, bonus or interest paid or credited to a partner, where the aggregate exceeds ₹20,000 in a financial year. This calculator works out the exact deduction for your payment.

Yes. Interest paid to a partner by the firm or LLP falls within the scope of s.194T (it is not governed by the s.194A interest TDS regime). The deduction is at 10% once the ₹20,000 annual threshold per partner is crossed. Note the firm's deduction for such interest is still capped by s.40(b) of the Income-tax Act 1961.

If the partner does not furnish their PAN to the firm, s.206AA of the Income-tax Act 1961 applies and TDS is deducted at 20% instead of 10%. The firm must also quote the partner's PAN on the TDS return and challan — a missing or invalid PAN also attracts a penalty under s.272B.

TDS deducted under s.194T must be deposited with the government by the 7th of the following month under Rule 30 of the Income-tax Rules 1962. The quarterly return (Form 26Q for non-salary payments) is due by 31 July, 31 October, 31 January and 31 May for the four quarters — a late return attracts a fee of ₹200 per day under s.234E.

If TDS is not deducted (or deducted but not deposited), the firm is treated as the assessee in default under s.201(1) of the Income-tax Act 1961, interest is chargeable under s.201(1A) (1% per month), and a penalty equal to the amount of TDS can be levied under s.271C. The firm also risks disallowance of the expense under s.40(a)(ia).