TDS on Int. & Salary to Partners

This query is : Resolved

anckoora (Querist)
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25 July 2009 dear sir,

As a partnership firm, are we liable to deduct TDS on (1) int. pd to partners on his capital & (2) salary paid to partners ? AND in the hands of partner, is these two income liable to income tax ? OR both are exempt income as per I.Tax ?

thanks in advance
anckoora

Ratan Sharma

Ratan Sharma (Expert)
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25 July 2009 No TDS is required to be made on interest and salary to partners. It is chargeable to tax in the hands of partners.

Nazir

Nazir (Expert)
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25 July 2009 As per section 194A(3)(iv) interest income credited or paid by firm to a partner of the firm is not subject to TDS. Thus, TDS is not required to be deducted on interest, but on salary you need to deduct as per the tax slabs.

both incomes will be taxable in the hands of partner.

Nazir

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 July 2009 The salary or remuneration to a partner by a partnership firm is not charged under the head SALARY , but treated as “business income” in the hand of partner. Therefore, there is no question of TDS on salary or remuneration paid by the firm to the partners of a firm .