Meaning of Commission or Brokerage <\/h2>\n\n\n\n
Commission or brokerage means any\npayment received either directly or indirectly by any individual who is acting\non behalf of any other person for:<\/p>\n\n\n\n
- Any service rendered or provided other than professional\nservices<\/li>
- Any service provided in the course of buying or selling of\ngoods or <\/li>
- Any transaction related to any assets or valuable articles\nor things other than securities.<\/li><\/ul>\n\n\n\nThe commission does not include the Commission or Brokerage of Insurance services referred to in Section 194-D in the ambit of section 194-H.<\/div>\n\n\n\n
Application of Section 194-H <\/h2>\n\n\n\n
Section 194-H applies on:<\/strong><\/p>\n\n\n\n
- Any individual who is accountable for paying commission or brokerage to an Indian resident<\/li>
- Any person or HUF<\/a><\/strong> that comes under the purview of section-44AB, i.e., their turnover or gross turnover exceeds INR 25 Lakhs and goes up to INR 1 Crore.<\/li><\/ul>\n\n\n\n
Section 44-AB<\/strong><\/h3>\n\n\n\n
It is important to have\na brief overview of this Section for a better understanding of section 194-H.\nAny individual who falls within the purview of Section 44-AB is also liable for\nTDS deduction under section 194-H. Section 44-AB is\napplicable to:<\/p>\n\n\n\n
- An Assessee\nengaged in a business, the turnover of which\nexceeds INR 1 Crore in the preceding year.<\/strong><\/li>
- An Assessee\ninvolved in the business of providing professional or legal service with annual\nreceipts exceeding INR 50 Lakhs in any\nfinancial year.<\/strong><\/li>
- Any person who opts for\nthe presumptive scheme under section 44ADA and declares their annual income\nless than the deemed gain or profit.<\/strong><\/li><\/ul>\n\n\n\n
Rate of TDS on Commission or Brokerage<\/strong><\/h3>\n\n\n\n
- Rate of TDS on Commission or Brokerage has been reduced to 5% with effect from Financial Year 2016-17 in the budget.<\/em><\/li>
- Before the budget in FY 2016-17, the rate of TDS on Commission or Brokerage was 10%.<\/li>
- The TDS is deducted at a flat rate of 5%, which means there is no Surcharge, education cess, or SHEC is levied above TDS.<\/li>
- PAN is mandatory while paying the TDS to the government. In case the person who receives the commission does not furnish his PAN<\/em> to the person who is deducting TDS, the rate of TDS for that case would be applicable at the rate of 20% of the Commission amount. <\/em><\/li><\/ul>\n\n\n\n
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<\/a><\/figure>\n\n\n\nExceptions for applicability of Section 194-H<\/h2>\n\n\n\n
Section 194-H does not apply in the following cases:<\/strong><\/p>\n\n\n\n
- No TDS is required to be deducted in case the one-time amount, or the sum of the total amount paid as a commission or brokerage does not exceed INR 50,000 in any financial year.<\/li>
- Any individual who has obtained nil or lower rate TDS certificate under section 197. <\/li>
- Commission or brokerage paid by BSNL or MTNL to the public call franchise.<\/li>
- Any commission paid as per section 192 as an insurance commission does not come under the purview of this Section. Such insurance commissions are covered under section 194D<\/strong>[1]<\/a><\/sup>.<\/li>
- Any commission paid by a company to its employees is covered under section 192 and not under this Section.<\/li>
- Payment made by RBI to associate banking companies or NBFCs.<\/li>
- Payments made by any financial corporations that are registered under the central finance bill.<\/li>
- Income tax refunds.<\/li>
- Any payment which is done as an investment towards LIC policy, UTI or any other investment securities of co-operative societies. <\/li>
- Income in the form of interest received from the savings account, RD, FD, etc<\/li>
- Interest income received from Kisan Vikas Patra, NSC, etc.<\/li>
- Interest income from the NRE account.<\/li>
- Payment of brokerage or commission to the stock exchange for the transactions of securities.<\/li>
- Brokerage paid to underwriters.<\/li><\/ul>\n\n\n\n
Point of Deduction for TDS<\/strong><\/h2>\n\n\n\n
TDS is required to be\ndeducted under Section 194-H\nin the following events, whichever takes place earlier:<\/p>\n\n\n\n
- The credit of commission income in the account\nof the recipient of the income<\/li><\/ol>\n\n\n\n
OR<\/p>\n\n\n\n
- Payment of commission or\nbrokerage through cash, cheque, draft or any other mode<\/li><\/ul>\n\n\n\n
Due Date for deposit of TDS<\/strong><\/h2>\n\n\n\n
The Due Date for deposit\nof TDS with the government is:<\/p>\n\n\n\n
- When the tax is deducted from such commission from April to\nFebruary: the due date for deposit of\nsuch TDS is 7th<\/sup> of the\nsucceeding month.<\/em><\/strong><\/li><\/ol>\n\n\n\n
- When the tax is deducted from such commission during March: the due date for deposit of such TDS is on or before 30th<\/sup> April.<\/em><\/strong><\/li><\/ul>\n\n\n\n
Nil TDS or Lower rate TDS certificate<\/strong><\/h2>\n\n\n\n
Nil TDS or lower TDS certificate is issued to an applicant\nto avail of the benefits of nil or a lower rate of TDS. This certificate is\nrequired to be furnished to the person who is deducting TDS while making the\npayment of commission or brokerage.<\/p>\n\n\n\n
- Assessee is required to\napply Form 13 to the income tax officer with the following information:<\/li>
- Name of the assessee<\/li>
- Complete address of the assessee<\/li>
- PAN <\/li>
- Purpose of the payment received<\/li>
- Income details of last 3 years<\/li>
- Projected income for the current financial year<\/li>
- Tax payments made during the current financial\nyear.<\/li>
- Certificate issued under this Section is valid only till the end of the Assessment Year\nmentioned on the certificate unless and until the same\nis canceled by the competent authority.<\/li><\/ul>\n\n\n\n
- When the tax is deducted from such commission during March: the due date for deposit of such TDS is on or before 30th<\/sup> April.<\/em><\/strong><\/li><\/ul>\n\n\n\n
- When the tax is deducted from such commission from April to\nFebruary: the due date for deposit of\nsuch TDS is 7th<\/sup> of the\nsucceeding month.<\/em><\/strong><\/li><\/ol>\n\n\n\n
- Payment of commission or\nbrokerage through cash, cheque, draft or any other mode<\/li><\/ul>\n\n\n\n
- An Assessee\ninvolved in the business of providing professional or legal service with annual\nreceipts exceeding INR 50 Lakhs in any\nfinancial year.<\/strong><\/li>
- An Assessee\nengaged in a business, the turnover of which\nexceeds INR 1 Crore in the preceding year.<\/strong><\/li>