RK Garg & Company, a Partnership firm has paid Interest amounting - 1,20,000 and - 20,000 to its partners Ramesh Kumar Garg and Ashok Kumar Garg…

As per section 194T, a Partnership Firm, is required to deduct tax at source @10% on the amount of salary, remuneration, commission, bonus or interest payment to its partner where such sum or the aggregate of such sums exceeds - 20,000. In the present case, the interest paid to Ramesh Kumar Garg is 1,20,000 which exceed - 20,000 but interest paid to Ashok Kumar Garg is 20,000 only. Thus, RK Garg & Company is required to deduct tax at source of 12,000 i.e., @10% of 1,20,000, being the amount of interest paid to Ramesh Kumar Garg. No TDS is attracted for interest paid to Ashok Kumar Garg as the interest amount is not exceeding - 20,000.