TDS Forms 26Q and 27Q Updated: Key Changes and Impact of Section 194T
The Central Board of Direct Taxes (CBDT) has introduced crucial amendments to TDS reporting by implementing Section 194T. This new provision mandates the separate reporting of payments made by partnership firms to their partners. Consequently, Forms 26Q and 27Q have been updated to reflect these changes. Let’s explore the key modifications and their implications.
Key Highlights of the CBDT Notification
Introduction of Section 194T to ensure accurate TDS reporting on payments made to partners of a firm.
Updates to Forms 26Q and 27Q to include a separate section for reporting payments under Section 194T.
Effective from the date of publication in the Official Gazette.
Firms are now required to report salary, remuneration, commission, bonus, and interest payments made to partners separately in the relevant forms.
Understanding Section 194T
Section 194T mandates partnership firms to deduct and report TDS on specific payments made to their partners. These include:
Salary
Remuneration
Commission
Bonus
Interest
This provision enhances compliance by ensuring that payments to partners are separately recorded in TDS returns, reducing the chances of misreporting.
Major Changes in TDS Forms 26Q & 27Q
To accommodate Section 194T, the CBDT has revised Forms 26Q and 27Q to ensure accurate reporting of payments to partners.
Form 26Q (For Payments to Residents)
Purpose: Used to report TDS on payments made to resident individuals and entities.
Changes:
The heading now explicitly includes Section 194T.
A new row has been added in Annexure (Note 16) for payments under Section 194T.
Form 27Q (For Payments to Non-Residents)
Purpose: Used to report TDS on payments to non-resident individuals and entities.
Changes:
Section 194T has been added after Section 194N in the heading.
A new row has been introduced in Note 13 to record payments to partners under Section 194T.
Updated Table for TDS Forms 26Q & 27Q
| Form | Section Added | Payment Type |
|---|---|---|
| Form 26Q | 194T | Salary, remuneration, commission, bonus, or interest to a partner of a firm |
| Form 27Q | 194T | Salary, remuneration, commission, bonus, or interest to a partner of a firm |
| Form 27Q | 195 | Other sums payable to a non-resident |
Impact of These Changes on Partnership Firms
These updates will require firms to separately categorize payments made to partners and ensure accurate TDS deduction and reporting. This will:
Reduce the risk of non-compliance.
Streamline tax audit procedures.
Improve transparency in financial transactions.
Conclusion
The introduction of Section 194T and the subsequent updates to TDS Forms 26Q and 27Q emphasize the government’s push toward better tax compliance and transparency. Partnership firms must adapt to these changes to ensure proper TDS reporting and avoid penalties.
