The CBDT vide Notification No. 22/2025 dated March 27, 2025, notifies Income-tax (Seventh Amendment) Rules, 2025, effective upon publication. It updates Forms 26Q and 27Q to include Section 194T, introduced by the Finance (No. 2) Act, 2024, effective April 01, 2025. Section 194T mandates firms to deduct 10% income tax on payments like salary, remuneration, commission, bonus, or interest to partners, if exceeding ₹20,000 annually, at the time of credit or payment, whichever is earlier.
The notification from the Ministry of Finance amends the Income-tax Rules, 1962. Form No. 260 now includes “194T” in its heading and adds a new entry for payments to a firm’s partner under section 194T. Form No. 27Q also adds “194T” to its heading and replaces an entry for other sums payable to non-residents with a new entry for payments to a firm’s partner under section 194T. These changes take effect upon publication in the Official Gazette.
G.S.R. 195(E).— In exercise of the powers conferred by section 295 read with section 194T of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
(1) These rules may be called the Income-tax (Seventh Amendment) Rules, 2025.
(2) They shall come into force on the date of their publication in Official Gazette.
In the Income-tax Rules, 1962, in Appendix II,—
(A) in Form No. 260,—
(i) in the heading, after the figures and letter “194S”, the figures and letter “194T” shall be inserted;
(ii) in the Annexure, in the Note no. 16, in the Table at the end, the following shall be inserted, namely:-
| “194T | Payment of salary, remuneration, commission, bonus or interest to a partner of firm | 94T”; |
(B) in Form No. 27Q,—
(i) in the heading, after the figures and letter “194N”, the figures and letter “194T” shall be inserted;
(ii) in the Annexure, in the Note no. 13, in the table, for the row,—
| “195 | Other sums payable to a non-resident | 195”, |
the following rows shall be substituted, namely:-
| “194T | Payment of salary, remuneration, commission, bonus or interest to a partner of firm | 94T” |
| 195 | Other sums payable to a non-resident | 195” |
Relevant section:
Following section 194T shall be inserted after section 194S by the Finance (No. 2) Act, 2024, w.e.f. 1-4-2025:
Payments to partners of firms.
194T. (1) Any person, being a firm, responsible for paying any sum in the nature of salary, remuneration, commission, bonus or interest to a partner of the firm, shall, at the time of credit of such sum to the account of the partner (including the capital account) or at the time of payment thereof, whichever is earlier shall, deduct income-tax thereon at the rate of ten per cent.
(2) No deduction shall be made under sub-section (1) where such sum or the aggregate of such sums credited or paid or likely to be credited or paid to the partner of the firm does not exceed twenty thousand rupees during the financial year.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/03/CBDT-NN-TDS-27.03.2025.pdf
