Salary or remuneration paid to partners is not taxable in hands of partners as Salary but it is considered as income from business. No employer employee relationship exists between partner and partnership firm.
Explanation 2 of section 15 says that “Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as “salary”.
Therefore no TDS is to be deducted on salary paid to the partners.
Some person argues that this provision only applies on salary paid to active partners. Salary paid to inactive partners is not allowed as deduction to the partnership firm under section 40(b) but still its a business income for the partner.The above explanation doesn’t differentiate between active or inactive partner and thus salary paid to any partner is not liable to TDS.