TDS on Partner Payments — Manage Cash Flow Smartly
TDS @10% now applies on salary, remuneration & interest paid to partners u/s 393. Apply for a Lower/Nil TDS Certificate (Form 128) u/s 395(1) and protect your working capital.
📌 What the New Law Says
Three things every partnership firm and LLP partner must know.
TDS @10% on Partner Payments
Under the Income-tax Act, 2025, TDS @10% applies on payments to partners — salary, remuneration, interest, etc. — as per Section 393 (relevant entry).
Cash Blockage Even at Nil Liability
Even where the partner's final tax liability is low or nil, TDS may still be deducted — leading to unnecessary cash blockage and reliance on refunds.
Apply Form 128 u/s 395(1)
Partners can apply for a Lower/Nil TDS Certificate under Section 395(1) by filing Form 128. Once approved, TDS can be reduced or not deducted — improving liquidity.
✅ Why Apply for Lower/Nil TDS Certificate
Evaluate eligibility early — apply, and optimise working capital.
Avoid unnecessary TDS deduction on partner payments
Improve firm and partner working capital / liquidity
No need to wait for refunds at year-end
Smooth cash flow planning for the financial year
Full compliance with Section 393 & 395(1) of new Act
Lower/Nil TDS Certificates are issued for a specific financial year. Apply before payments are made — certificates do not apply retrospectively.
File Form 128 with a Trusted CA
CA Sonali Verma & team handle eligibility check, documentation and end-to-end filing of Form 128 u/s 395(1) so partners get a Lower/Nil TDS Certificate without delays.
📍 Sai Bhawan-164, Kanjari Sarai, Near Biharo Ka Mandir, Moradabad-244001, Uttar Pradesh, India