According to the Income Tax Department, it will now be mandatory for partnership firms and Limited Liability Partnerships (LLPs) to deduct TDS on certain payments to their partners.

this is the new rule

This new rule has been brought under section 94T of the Income Tax Act. Which has become effective from this financial year 2025-26. Know the new rules of TDS in detail –

1. Now the partnership firm will have to deduct TDS on all payments like salary, remuneration, commission, bonus and interest made to the partners. After which it has to be deposited to the government.

2. TDS will be deducted at the rate of 10% on these payments.

3. If the total payment to a partner in a financial year exceeds Rs 20,000, then it will be mandatory to deduct TDS. That is, it is not necessary to deduct TDS on payments less than Rs 20,000.

4. These new rules of TDS will apply to partnership firms and LLPs. Whoever makes any payment to their partners. TDS will be deducted before making the payment and will be deposited with the government. This rule has come into effect from 1 April 2025.

5. TAN is necessary

Partnership firms must have TAN. Firms which do not have TAN will have to apply for it.

This is the aim of the government

The government wants to make tax collection on payments from partnership firms transparent and effective so that cases of tax evasion can be stopped.

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TDS Rules From April 1: Today i.e. from 1st April 2025, the new financial year has started. Many rules have changed at the beginning of the month itself. In this episode, FD investors have got a big relief. In fact, in the budget for the financial year 2025-26, Finance Minister Nirmala Sitharaman had announced that the limit of TDS on interest received on fixed deposits would be increased. The purpose of this change is to relieve small investors and senior citizens from the burden of tax deduction. This change is beneficial for the common people. With the increase in the TDS limit, people will have a little more money in their hands.

The government has increased the limit of TDS on interest income for common citizens from Rs 40,000 to Rs 50,000. For senior citizens, the TDS deduction has been doubled. It was earlier Rs 50,000, which has now become Rs 1 lakh. If your interest income from FD is less than this new limit, then TDS will not be deducted.

What is TDS?

Tax Deducted at Source (TDS) is a tax collection system in which the government deducts tax directly at the source of income. TDS is applicable on many types of income, such as salary, interest on fixed deposits, rent, etc. This tax is deducted as per the prescribed rates.

What is TDS on Fixed Deposit?

TDS on Fixed Deposit is the tax that the bank deducts from the investor’s interest and deposits it with the government. When the interest earned on FD in the bank exceeds a certain limit, then the bank has to deduct TDS. This limit is different for senior citizens and non-senior citizens.

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The post New TDS Rules: New Tax Deducted at Source (TDS) rules to come into effect from April 1, 2025 first appeared on Rightsofemployees.com.