The Most Ignored Amendment in Budget 2024?

Everyone is talking about the LTCG, STCG rate increase, STT increase on F&O, changes in the new tax regime, and, as usual, no benefits for hardworking middle-class people. But no one is talking about the insertion of a new TDS section – Section 194T.

So, let us know what Section 194T is all about:

Section 194T – TDS on Payments to Partners of a Firm

A TDS of 10% is deducted on payments made by a firm to its partner. Payments include salary, remuneration, commission, bonus, or interest.

TDS is to be deducted only when aggregate payments to a partner exceed Rs. 20,000 in a financial year.

TDS should be deducted on the earlier of payment to the partner or credit in the partner’s account in the firm's books.

Partnership firms include Limited Liability Partnerships (LLPs).

The TDS will be applicable under Section 194T from April 1, 2025.

The government is increasing compliances for partnership firms. This new provision will surely increase compliance burdens and cash flow issues for partnership firms.

Let me know your thoughts in the comments!