18/03/2025
🔹 *Tax Changes for Partnership Firms (April 2025)*
The Finance (No. 2) Act, 2024 introduces two major income tax changes for partnership firms and LLPs:
1️⃣ *Partner Remuneration Limit (FY 2025-26)*
- For the first ₹6,00,000 of book profit (or in case of a loss) – Higher of ₹3,00,000 or 90% of book profit.
- For remaining book profit – 60% of book profit.
2️⃣ *TDS on Payments to Partners – Section 194T*
- Applies to all partnership firms & LLPs, regardless of turnover.
- TDS @10% if total payments to a partner exceed ₹20,000 in a financial year.
- Includes salary, commission, bonus, interest on capital/loan (excludes drawings & capital repayment).
👉 *Impact on Partners*
- TDS deducted can be adjusted against their final tax liability while filing ITR.
- No exemption under Form 15G/15H or reduction in TDS under Section 197.
👉 *Non-Compliance Penalties*
- 30% disallowance of expenses (salary, commission, etc.).
- 1% per month penalty for non-deduction & 1.5% per month for non-payment of TDS.
- ₹200 per day penalty for late filing of TDS returns.
