Tds applicability on commission

[anil kalia]

A partnership firm is paying commission to its partners. The payment of commission is duly authorised by the partnership deed and is allowable u/s40(b) of the Income Tax Act, 1961. Pl advice whether the firm is liable to deduct TDS U/s 194H on commission paid to partners.

[CAGOPALJI AGRAWAL]

Dear Anil Ji, In my view, The commission would also be called as remuneration as per section 40(b) so is not subject to TDS due to lack of employer-employee relationship.

Dear Anil, TDS will not be applicable on the payment made to Partners. please write email for more clarification [email protected]

AI Summary

TDS on commission not applicable to partners when payments are authorised as remuneration under section 40(b).
Commission paid to partners pursuant to the partnership deed and allowable as remuneration under section 40(b) is not treated as subject to deduction of tax at source under TDS U/s 194H, because such payments arise from partnership remuneration rules and lack an employer employee relationship that would bring them within the commission TDS provision.