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tds on commission

abid (accountant) (169 Points)

26 September 2007

hi,

let us ask u that our co.have paid a commission of Rs.7000/- and 6000/- to individuls respectivily in 2006-07 we have not deducted tds .will it attract tds if yes on what % and under which condition .

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7 Replies

MAHENDRA IYER (SERVICE) (315 Points)
Replied 26 September 2007

Threshold limit for payment of comm./brokerage u/s 194H is Rs. 2500/-. In your case tax is required to be deducted as it exceeds the statutory limit. Applicable rate if the payee are individual would be 10.30% if the income of the individual is less than 10 lakhs and 11.33% if the same is in excess of Rs. 10 Lakhs.

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Ravikumar.G (Consultant) (18525 Points)
Replied 26 September 2007

What is Mr.Mahendra said in above is correct. If u have not deduted TDS the entire commission will not be allowed as a Expenditure.

CMA Gul S (Program Manager) (5910 Points)
Replied 26 September 2007

The Commission will be disallowed

CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 27 September 2007

According to section 194H of the Incometax Act, Any person, not being a individual or hindu undivided family, who is responsible for paying, on or after 1st day of June,2001, to a resident any incime by way of commission (not being insurance commission referred to in section 194D)or brokerage,shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of 10%. Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed Rs. 2,500/- Provided also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees. Add surcharge to the tax, as applicable which is presently at 3%.