Sankar Kumar Associates

1. Table 3.2 of Form GSTR-3B captures the inter-state supplies made to unregistered persons, composition taxpayers, and UIN holders out of the supplies declared in Table 3.1 & 3.1.1 of GSTR-3B. The values in Table 3.2 of GSTR-3B auto-populates from corresponding inter-state supplies declared in GSTR-1, GSTR-1A, and IFF in requisite tables.

2. It is to inform you that from April-2025 tax period, inter-state supplies auto-populated in Table 3.2 of GSTR-3B will be made non-editable. The GSTR-3B shall be filed with the auto-populated values as generated by the system only.

3. Therefore, in case any modification/amendment is required in auto-populated values of Table 3.2 of GSTR-3B, same can be done only by amending the corresponding values in respective tables of GSTR-1A or through Form GSTR-1/IFF filed for subsequent tax periods.

4. To ensure that GSTR-3B is filed accurately with the correct values of inter-state supplies, it is advised to report the correct values in GSTR-1, GSTR-1A, or IFF. This will ensure the auto-populated values in Table 3.2 of GSTR-3B are accurate and compliant with GST regulations.

FAQ’s

1. What are the changes related to reporting supplies in Table 3.2?

Starting from the April 2025 tax period, the auto-populated values in Table 3.2 of GSTR-3B for inter-state supplies made to unregistered persons, composition taxpayers, and UIN holders will be non-editable, and taxpayers will need to file GSTR-3B with the auto-populated values generated by the system only.

2. How can I rectify values in Table 3.2 of GSTR-3B if incorrect values have been auto-populated after April 2025 period onwards due to incorrect reporting of the same through GSTR-1?

If incorrect values are auto-populated in Table 3.2 after April 2025, taxpayers need to correct the values by making amendments through Form GSTR-1A or through Form GSTR-1/IFF filed for subsequent tax periods.

3. What should I do to ensure accurate reporting in Table 3.2 of GSTR-3B?

Taxpayers should ensure that the inter-state supplies are reported correctly in their GSTR-1, GSTR-1A, or IFF. This will ensure that the accurate values are auto-populated in Table 3.2 of GSTR-3B.

4. Till what time/date I can amend values furnished in GSTR-1 through Form GSTR-1A?

As there is no cut-off date for filing Form GSTR-1A before GSTR-3B which means Form GSTR-1A can be filed after filing Form GSTR-1and till the time of filing Form GSTR-3B. Hence, any amendment required in auto-populated values of table 3.2, same can be carried out through Form GSTR-1A till the moment of filing GSTR-3B.

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 percent.

(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 Applicable wef 01.04.2025

Provisions at a glance:

Who is liable to deduct TDS	Firm/LLP As per S.2(23), Firm shall have the meaning assigned to it in the Indian partnership act,1932 and shall include a LLP as defined in the LLP act, 2008.
Deductee/payee	Partner of the firm/LLP, including a minor admitted to the benefits of partnership
Payment from which TDS is to be deducted	Salary, remuneration, commission, bonus and interest paid/credited to a partner of a firm/LLP
Payees entitled to receive payment without deduction of TDS – Threshold limit for non-deduction of TDS	₹ 20,000 The threshold is not to be applied separately to payments salary, remuneration, commission, bonus or interest made to partners but to the aggregate of these types of payments made to partners during a financial year.
Tax base i.e. the amount on which TDS % is to be applied for computing TDS to be deducted	Salary, remuneration, commission, bonus and interest to any account (including capital account) of the partner of the firm under the purview of TDS for aggregate amounts of more than ` 20,000 in the financial year. If threshold exceeded, TDS to be deducted on entire amount of salary, remuneration etc. and not merely the excess over ₹ 20,000
Applicable date	The above amendment will be effective from 1st April, 2025, unlike various other proposed amendments to TDS provisions which would be effective from 1st October,2024.
Do we need to deduct TDS for a Non Resident partner also	Yes.
Applicable rate of TDS	10% If the payee partner is a resident, no surcharge/health and education cess If the payee partner is a non-resident, 10%+ applicable surcharge +health and education cess
For Non Resident partner Do we need to deduct under this section or U/s. 195 ?	Income earned by way of remuneration or interest by a non-resident partner from an Indian partnership firm is chargeable to tax as business income, and Section 195 mandates tax deductions at rates of 30% or 40%, as applicable The new Section 194T does not exclude non-resident recipients from its scope, which creates potential controversies regarding the applicability of both sections. Moreover, neither provision overrides the other; both sections hold equal weight and must be interpreted and applied in conjunction. To overcome conflict, the doctrine of harmonious construction, In line with this principle, section195 would apply to non-resident payees, while Section 194T would apply to resident payees for tax deductions. This approach ensures a logical, balanced conclusion and avoids any conflict between the two provisions. The observations of the apex court while dealing with tax deduction under Section 194E in the case of PILCOM v. CIT and language employed in Section 194T support the argument that even if remuneration payable to a non-resident partner is not taxable in India, the obligation to deduct tax under Section 194T still persists. It is worth noting that the non- resident can opt for treaty benefit at time of filing his return of income in India.
Rate of TDS if PAN/Aadhaar of payee partner is not available	20%
Wheater provisions of higher TDS rates for ITR non-filers (Section 206AB) is applicable to Section 194T	No.
Time of deduction	At the time of credit of such amount to the account of the partner (including the capital account) or at the time of payment thereof, whichever is earlier
Whether the payee partner can obtain certificate u/s 197 for no TDS or TDS at a lower rate	No.
Whether the payee partner can avail the facility of nil TDS deduction by submitting self-declaration in Form 15G/Form 15H	No.
Furnishing of TDS returns	Yes. In Form 26Q
TDS certificate to be issued by deductor (firm/LLP) to deductee (partner)	Form No. 16A
Furnishing of statement in respect of payment of any income to residents without TDS	No such requirement prescribed for Section 194T yet
No power to CBDT to issue any removal of difficulties order	Unlike Sections 194Q, 194R and 194S, Section 194T does not empower CBDT to issue any removal of difficulties order binding on the assessee and the authorities, including CIT(A).
TDS is deductible whether the payee-partner is a working partner or not?	This distinction is not relevant for Section 194T. TDS is deductible whether the specified sums are paid or credited to a working or non-working partner. Likewise, for deduction of TDS under Section 194T, it does not matter whether the interest payment to the partner is allowable or disallowable under Section 40(b).
Time of Deduction of TDS	TDS is to be deducted at the time of crediting such sum to the partner’s account (including his capital account) or at the time of payment thereof, whichever is earlier. Therefore, there is no need to deduct TDS under Section 194T if the earlier of credit and payment occurs before 1-4-2025.
Where the earlier of credit and payment took place prior to 1-4-2025, such sum is not covered under TDS and is not to be included in reckoning the limit of ` 20,000.	This is based on CBDT’s Circular issued under Section 194Q in the context of that Section CBDT had, vide Circular No. 13/2021, dated 30-6-2021, clarified that Since section 194Q of the Act mandates buyers to deduct tax on credit of sum in the account of the seller or on payment of such sum, whichever earlier, the provision of this subsection shall not apply on any sum credited or paid before lst July 2021. If either of the two events had happened before 1st July 2021, that transaction would not be subjected to the provisions of section 194Q of the Act.
Practical Difficulties and Obstacles	Determining Partner Remuneration Dependence on Book Profits Increased Compliance Burden
Though section 194T is not a long section, but several issues arise out of it:1.	Allowability or disallowability of deduction in the hands of the firm and its corresponding taxability or non-taxability in the hands of the partner would be of no consequence in the matter of obligation to deduct tax at source. This mismatch would prompt CPC to issue notice to the partner to the effect that the income from the Firm offered in partner’s return is less as compared to TDS credit claimed in the return of income. Any significant delay in finalisation of books of accounts of the firm in such a situation may lead to the failure of timely compliance of deduction of tax at source and its deposit in time. In absence of non obstante clause in both section 194T and section 195, this issue i.e. tax is to be deducted under which of the two sections, would always remain relevant Considering the fact that there are many micro entities in the form of partnership firms, prescribing TDS compliance inrespect of payment to partners seems to be a rigid measure given the fact that the threshold limit is also too low at Rs.20,000.
contains certain practical difficulties:	A partner may introduce or withdraw capital for various reasons during the year. Temporary withdrawals may be repayable within the same year or adjusted against remuneration or interest at year-end. These transactions are not considered salary, commission, or remuneration when they occur. (b) A partner’s remuneration may be fixed or based on the firm’s financial results, determined after finalising accounts. This makes the nature of the payment unclear at the time, creating ambiguity in applying Section194T. (c) Additionally, where the firm’s accounts are finalised after the due date to deposit the tax deducted in the last month (30th April), it may lead to interest and penalties on delayed TDS deposits, despite no fault of the assessee.
Other Considerations	Remuneration is calculated based on the book profit, which is typically finalized at the end of the year. This often leads to delays in deducting and paying tax on time unless partners withdraw partial remuneration systematically, complying with TDS norms throughout the year. This situation will compel firms to finalize their accounts in a timely manner to comply with TDS provisions. The judiciary has consistently held that the allowability of remuneration to partners must align with the partnership deed, which should specify the manner and method of calculating remuneration. Therefore, partnership firms must revisit their deeds within the prescribed timeframe to ensure compliance with the amended law and the provisions of the Income Tax Act, 1961.
TDS under new Income tax bill, 2025	All the TDS sections in the current act (Section 192 to 194T) are now consolidated under one section, section 393. The rates and threshold limits have not been changed. The rates and limits as proposed in Budget 2025 also hold good in the new bill. S. 393(3)-FOR PAYMENTS TO ANY PERSON [Table: S.No. 7]
Closing Remarks: With these changes, it is essential for firms to revisit their existing partnership deeds and implement robust compliance processes to ensure the timely discharge of their tax deduction obligations, thus avoiding potential tax liabilities. When it comes to remuneration payable to foreign partners, firms and LLPs must exercise extra caution in meeting their obligations under the Act. To mitigate future challenges, one can opt to apply Section 195 if the remuneration is taxable and Section 194T if it is not taxable in India when making payments to non-resident partners. However, this issue is not free from litigation and judiciary may confirm the particular interpretation. While this move by the government is expected to foster a more equitable tax environment, promote growth, and strengthen the overall tax compliance framework for partnership firms and LLPs, further clarification from the government is necessary to enhance the efficiency and effectiveness of this provision, ensuring clearer guidance for businesses.

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