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 ?
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.
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 .
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