Section 194H of the Income Tax Act: A Comprehensive Guide to TDS on Commission Payments
Meaning
This section deals with TDS on income by way of commission or brokerage, by any person responsible for paying to a resident.
Meaning of Comission/Brokerage
Commission or brokerage includes any payment received or receivable, directly or indrectly, by a person acting on behalf of another person-
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
Time For Deduction of TDS
It will be deducted at the time of credit of such income to the account of the payee or to any other account.
When TDS should not be deducted
- Brokerage or Commission is less than or equal to Rs. 15,000 in a financial year.
- Employer is paying commission to the employee covered u/s 192 of the IT act.
- Commission on insurance and loan underwriting.
- Individuals with a Nil TDS certificate from an authorised body u/s 197.
- Charges imposed for warehouse services.
- Paying Finanancial corporations under the range of central finance.
- Interest from the NRI account.
- Payments made by RBI to any bank.
- Brokerage or commission for providing securities to the public.
- Income by interest from any savings with the bank and post office.
- Commission imposed on the transaction by using a credit or debit card between an acquirer bank and merchant organisation
- Any payment of commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees
- Interest accrused from the NRE account.
Rate of TDS Deduction
TDS shall be deductable @ 5%. No surcharge and Education Cess shall be added to above rates.
Note: TDS shall be 20% if PAN is not quoted by the deductee.
Time Limit for depositing TDS
TDS deducted during the month of April to Feburary is to be deposited on or before the 7th of next month. Tax deducted in the month of March is to be deposited on or before 30th April.
