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TDS on commission or brokerage (section 194h)

Persons required to deduct and collect tax:

  • Any person who is responsible for paying to a resident, commission (not being insurance commission under section 194D) or brokerage is required to deduct TD
  • However, Individuals and HUF only those who are liable to audit under section 44AB are liable to deduct tax on any type of payment including brokerage or commission.

Rate of TDS and Threshold limits under section 194H

From 1st June 2016 Before 1st June 2016
Threshold Limit Rs. 15,000 Rs. 5,000
If PAN is furnished 5% 10%
If PAN is not furnished 20% 20%

No surcharge or education cess is levied on payment to resident.
Assessee can apply to assessing officer for no TDS or TDS at lower rate under Section 197.


Time Period for Deduction of TDS:

  • TDS is required to be deducted at the time of payment or credit to the account of such payee whichever is earlier.

TDS not required to be deducted in certain cases:

  • TDS is required to be deducted only when the aggregate of the amounts of such income credited or paid or likely to be paid or credited during the financial year exceeds Rs. 5,000. (Rs. 15,000 from financial year 2016-17)
  • TDS is not required on brokerage or commission payable by BSNL or MTNL to their public call office franchisees.
  • If commission is paid by employer to its employee, then such commission is not liable to be deducted in this section. It forms part of salary.
  • If service tax is applicable and levied then the TDS is required to be deducted only from the amount payable as brokerage or commission and not deductible on service tax amount.

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