TDS on Commission/Brokerage is required to be deducted under Section 194H by the person making the payment by way of commission or brokerage. TDS on Commission/Broker is required to be deducted @ 10% at the time of:-
- Making such payment or
- Credit of such income to the account of the payee in the books of the person deducting such TDS
whichever is earlier.
The Rate of TDS has been reduced from 10% to 5% in Budget 2016. This revised rate would be applicable from Financial Year 2016-17.
TDS on Commission/ Brokerage
TDS on Commission/Brokerage is to be deducted by all persons except Individual & HUF. However, Individuals & HUF are also liable to deducted TDS on Commission in case the individual or HUF is liable get his tax audit conducted under Section 44AB i.e. their turnover/receipts exceed Rs. 25Lakhs/ 1 Crore (as the case may be)
- Recommended Read: Tax Audit under Section 44AB
No additional surcharge or Education Cess is required to be deducted over and above the tds rates as specified. Therefore, TDS should be deducted @ 10% on the total amount inclusive of Service Tax (if any).
- Recommended Read: TDS on Service Tax
The TDS deducted under Section 194H is required to be deposited by with the Govt. before the due date of payment of TDS by the person who has deducted the TDS. At the time of deposit of TDS with the Govt., the TAN No. of the person deducting the TDS and the PAN Card No. of the person whose TDS has been deducted should also be quoted.
Meaning of Commission or Brokerage
Commission or Brokerage includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (except professional services) or for any services in the course of buying or selling or in relation to any transaction relating to any asset; valuable article or thing (except securities)
As TDS on Commission is not liable to be deducted in relation to transactions related to securities, the provisions of Section 194H are not attracted on:-
- Brokerage or Commission paid to underwriters
- Brokerage and sub-brokerage on public issue of securities
- Brokerage on stock exchange transactions of securities
Exceptions to TDS on Commission/Brokerage
TDS on Commission/ Brokerage is not liable to be deducted in the following cases:-
- The amount paid or payable during the financial year does not exceed Rs. 15000 (Limit increased from Rs. 5000 to Rs. 15000 in Budget 2016)
- Payment is being made by BSNL or MTNL to their public call center franchisees
- Commission is being paid by an employer to his employees. Such commission is liable to be deducted as TDS on Salary under Section 192.
- TDS on Insurance Commission shall not be deducted under this section as that has been specifically covered under Section 194D