The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Seventh Amendment) Rules, 2025 which further amend the Income-tax Rules, 1962 by adding new Rules relating to Tax Deducted at Source (TDS).
The Board has notified amendments to Form 26Q to incorporate reporting requirements under Section 194T of the Income Tax Act, which mandates Tax Deducted at Source (TDS) on payments such as salary, remuneration, commission, bonus, or interest made to a partner of a firm.
This new provision ensures tax compliance by requiring firms to deduct TDS on such payments, aligning with broader tax reporting and withholding measures. The revised Form 26Q, used for quarterly TDS returns on non-salary payments, now includes specific fields to capture details of deductions under Section 194T, thereby enhancing transparency in financial transactions between firms and their partners.
The introduction of Section 194T brings changes to Forms No. 26Q and 27Q, specifically addressing the payment of salary, remuneration, commission, bonus, or interest to a partner of a firm.
In Form No. 26Q, the heading has been modified to include “194T” after “194S,” and in the Annexure, Note No. 16, a table now incorporates a row for 194T, detailing its applicability to partner payments.
Similarly, Form No. 27Q has been updated, with the heading now including “194T” after “194N.” Additionally, the table in Note No. 13 has been revised, replacing the existing row for section 195 with two rows: 194T, covering payments made to a partner, and 195, retaining its scope for other sums payable to a non-resident.
Section 194T covers payments made by a firm to its partners, including salary, remuneration, commission, bonus, and interest on any account, whether it is a loan account or a capital account. Under this section, Tax Deducted at Source (TDS) is applicable at a rate of 10%. However, TDS is required to be deducted only when the total payments made to a partner exceed Rs. 20,000 in a financial year.
Notification Details
Notification No. 22/2025
Date: 27/03/2025
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