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tds on commission

chandan singh (Senior Finance Associates) (49 Points)

05 April 2018

Dear sir,
i want to know that how much % tds applicable on commission. what is rule and regulation. kindly anyone consult me.

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4 Replies

A B Kundu (Professional) (1422 Points)
Replied 05 April 2018

If it is Insurance Commission the TDS shall be deducted U/S 194D @ 5%. And for any other commission other than insurance commission, TDS shall be deducted U/s 194H @ 5%.

In both the cases the tds shall be deducted if the payment made to a payee is more than Rs.15,000/- in a year.

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CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 05 April 2018

If commission paid during the year is more than Rs.15000/- then TDS @ 5%is required to be deducted.

A B Kundu (Professional) (1422 Points)
Replied 05 April 2018

Also refer this list for any other information -

https://www.incometaxindia.gov.in/charts%20%20tables/tds%20rates.htm

CA Rashmi Gandhi (Chartered Accountant) (86323 Points)
Replied 05 April 2018

Section 194H is for income tax deducted on any income by way of commission or brokerage, by any person responsible for paying to a resident.

Individuals and Hindu Undivided Family who were covered under section 44AB are also required to deduct TDS.

Section 194H does not include insurance commission referred to in section 194H.

When does TDS under Section 194H need to be deducted?

TDS under Section 194H will be deducted at the time of credit of such income to the account of the payee or to any other account.
Whether called suspense account or by any other name 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.

What do you mean by Commission and Brokerage?

Commission or brokerage includes any payment

received or receivable,
directly or indirectly, OR
by a person acting on behalf of another person

TDS on commission or brokerage includes,

for services rendered (not being professional services), or
for any services in the course of buying or selling of goods, or
in relation to any transaction relating to any asset, valuable article or thing, except securities

Exceptions to Commission/Brokerage

People are under the presumption that Presumptive Taxation is applicable to Income from the commission but technically it is not correct.

What is the rate of TDS?

The rate of TDS is 5%.
No surcharge, education cess or SHEC shall be added to the above rates. Hence, the tax will be deducted at source at the basic rate.
The rate of TDS will be 20% in all cases if PAN is NOT quoted by the deductee.

Under what circumstances TDS u/s 194H is not deductible?

No deduction shall be made under this section in a case where the amount or the aggregate amounts of such income to be credited or paid during the financial year does not exceed INR 15,000
The Person can make an application to the assessing officer under section 197 for deduction of tax at NIL rate or at a lower rate.