According to Section 194H of Income Tax Act, ”TDS on Commission” should be deducted by a person responsible to pay any amount to a resident person in the form of Commission or Brokerage should deduct TDS. In case of Individuals and HUF, those who are liable to audit under Section 44AB i.e, Whose turnover/gross receipts exceeds 1 crore/25 lakhs are liable to deduct TDS on any commission or brokerage paid.
The insurance commission mentioned under Section 194D is not included commission. If such Commission/Brokerage is payable to Non-Resident then TDS will be deducted under Section 195.
Who Should Deduct TDS on Commission?
TDS on commission or Brokerage is to be deducted by all the persons except individuals and HUF. But if that individual or HUF is liable to get their accounts audited under Section 44AB then they are also liable to deduct TDS on commission or brokerage.
What is Section 194H in Income Tax Act
- Under Section 194H, TDS will be deducted at the time of credit of such commission or brokerage to the account of the payee
- TDS on Commission will be deducted at the time of payment of cash or at the time of credit to the account or at the time of issue of cheque, whichever is earlier.
- Commission or brokerage includes any payment received/receivable directly or indirectly or by a person acting on behalf of another person.
TDS on Commission/Brokerage includes any of the following nature of payment:
- For any services rendered. (except professional services)
- For any services including buying or selling of goods.
- Payment relating to any transaction pertaining o sale/purchase of any asset, valuable goods except securities.
TDS on Commission Rate
- The person responsible to deduct TDS on Commission should deduct 10%.
- There is no additional surcharge or educational cess imposed o payment to resident.
- For payment to Non-Resident refer Section 195.
- The rate of TDS on Commission will be 20% if the deductor does not quote PAN.
- TDS on Commission is not liable to be deducted in the following cases:
- The total amount paid or payable during the financial year does not exceed Rs 15000.
- The commission or brokerage payable by BSNL or MTNL to their public call centre Franchisee.
- Commission paid by an employer to employee will be deducted under Section 192 TDS on Salary
- Bank guarantee Commission
- TDS on insurance commission which will be deducted under Section 194D.
Time Limit on Depositing the TDS
As like other TDS, TDS on Commission deducted should be deposited to the government on or before 7th of the succeeding month but TDS deducted on the month of march should be deposited on or before 30th April.