As per section 194T, TDS is to be done on remuneration paid to a partners. A partnership firm pays fixed salary of 3 lakhs p.a. But as per section 40(b) allowable salary is 2 lakh.
As per section 28(v), its very clear that partner will be taxed only on 2 lakhs which is the deduction allowed in the hands of the firm.. But the firm has to mandatorily deduct tax on 3 lakh u/s 194T. In the above situation, how the partner can offer income 2 lakh as per section 28(v) while TDS is done on 3 lakh. Plz clarify..
TDS on partner remuneration raises mismatch concerns when deduction exceeds the amount taxable in the partner's hands. TDS on remuneration paid to a partner under section 194T is questioned where a firm pays 3 lakhs per annum, but only 2 lakhs is allowable under section 40(b). The issue raised is that section 28(v) appears to tax the partner only on the amount allowed as deduction in the firm's hands, creating a mismatch when tax is deducted on the full payment. The query seeks clarification on how the partner should offer income when TDS is deducted on an amount higher than the taxable income. (AI Summary)
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