FAQ on Section 194H – TDS from Commission and Brokerage

Q1. Who is responsible to deduct tax u/s 194H?

Ans. Any person, (other than individual or a Hindu undivided family) who is responsible for paying, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, deduct income-tax thereon.

However, individuals and HUF who were covered under section 44AB(a) and (b) in the preceding previous year i.e. whose gross turnover/receipts of the business/profession in the immediately preceding financial year exceeded business/profession in the immediately preceding financial year exceed Rs.  1,00,00,000 / 25,00,000, as the case may be, are also required to deduct tax at source.

Q2. What is the point of deduction of TDS u/s 194H?

Ans. It will be deducted at the time of credit of such income to the account of the payee or to any account, whether called suspense account or by any other name or at the time of payment, of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.

Q3. At what rate TDS has to be deducted u/s 194H?

Ans. The rate of TDS shall be 10%.

Notes: No surcharge, education cess or SHEC shall be added to the above rates. Hence, tax will be deducted at source at the basic rate.

The rate of TDS will be 20% in all cases, if PAN is not quoted by the deductee on or after 1-4-2010.

Q4. Under what circumstances TDS u/s 194H is not deductible?

Ans. (1) No deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to the payee, does not exceed ` 5,000 (` 2,500 upto 30.06.2010)

(2) No tax shall be deducted on any commission or brokerage payable by Bharat Sanchar Nigam Ltd. or Mahanagar Telephone Nigam Ltd. to their public call office franchises (Third proviso to section 194H inserted w.e.f. 1-6-2007)

Q5. What is the meaning of words Commission or brokerage for the purpose of section 194H?

Ans. Commission or brokerage includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person:

(a)    for services rendered (not being professional services), or

(b)    for any services in the course of buying or selling of goods, or

(c) in relation to any transaction relating to any asset, valuable article or thing, not being securities.

Q6. Whether Provisions of section 194H applicable on discounts offered  by laboratories rendering testing facility to collection centers/  franchisees?

Ans. Where assessee laboratory was rendering services of testing samples to collection centres/franchisees, TDS under section 194H not required in respect of discount offered by assessee to said collection centres/ franchisees. 

Q7. Whether Provisions of section 194H applicable to trade incentive to  dealers?

Ans. Where assessee, a manufacturer of bicycles, was giving trade incentive to dealers, Tribunal was justified in holding that if dealers were selling goods at price for which they were purchasing from company, such trade incentive would amount to commission for purpose of section 1 94H. 

Q8. Whether Provisions of section 1 94H applicable on Discount granted  to licensed stamp vendors on sale of stamp paper?

Ans. Discount granted to licensed stamp vendors on sale of stamp paper, by treasury cannot be termed as `commission or brokerage to attract TDS under section 194H. 

Q9. Whether provisions of S. 194H shall apply to free issue of goods under trade scheme?

Ans. Free issue of goods under trade scheme and free gift on sponsorship and promotions and early payment discount given to distributors do not constitute commission as the distributor works on principal to principal basis and not on principal agent relation.

Q10. Whether TDS u/s 194H deductible on turnover commission payable by RBI to Agency Banks?

Ans. Tax deduction at source under section 194H should not be applicable in respect of Turnover Commission payable by the Reserve Bank of India to the Agency Banks (Banks authorized for conducting Government business) for performing the general banking business of the Central and State Governments on behalf of RBI. Circular: No. 6/2003, dated 3-9-2003.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

31 thoughts on “FAQ on Section 194H – TDS from Commission and Brokerage

    1. piyush

      individual can deduct TDS only if in previous year he was liable for TAX Audit u/s 44AB ie
      individuals and HUF who were covered under section 44AB(a) and (b) in the preceding previous year i.e. whose gross turnover/receipts of the business/profession in the immediately preceding financial year exceeded business/profession in the immediately preceding financial year exceed Rs. 1,00,00,000 / 25,00,000, as the case may be, are also required to deduct tax at source.

      Reply
  1. ponnuvel

    which itr form should i use for income from 194h brokerage commission. shall i include agriculture income in that same form or should i use separate form.

    Reply
    1. piyush

      commission income is taxable, whereas agricultal income is exempt upto specifed amount. Further you have to file only one return for both income.

      Reply
  2. gitaram

    I am bank commission agent daily recoring my income is 100000per month commisin I pay to income tax or tds plz sugetion me

    Reply
  3. TDSMAN Post author

    Dear Soniya,

    To the best of our knowledge it is correct. However, there could be difference in interpretation of the transaction. Please ask your Chartered Accountant to verify.

    Reply
    1. piyush

      There is no seperate rate is mentioned for commission for sale of land. TDS @10/- if commission exceed 5000/-

      Reply
  4. Sanjeev

    I got my form 16 from employer. also I received form 16A TDS Certificate from my builder where I Purchase the apartment. As a referral amount of 30,000 since I referred someone else to purchase one apartment they deducted 3000 under 194H and given certificate. Now where shall I enter the 30000 details in ITR4s while submitting IT return through Income tax india Quick-Efile option.

    Reply
  5. keshav agrawal

    I am having a business of turnover above 1 crore and we are giving commission to few persons for selling our products and the amount of comission is more than 5000/- . then are we liable to deduct tds?

    Reply
  6. keshav agrawal

    I am having a business of turnover above 1 crore and we are giving commission to few persons for selling our products and the amount of comission is more than 5000/- . then are we liable to deduct tds? The people whom we are giving comission dont have PAN also.

    Reply
  7. arun kumar

    I have received a payment of Rs 3500 as a commission /brokerage,whose TDS of Rs 350 deducted & getting reflected in my form 26AS,under section 194H. But upto Rs 5000 no deduction to be made under section 194H. How can I get refund of this amount? In my ITR, where should I claim this refund?

    Another One: Is the tax refund considered as Income or not?

    Reply
    1. somashekar k

      dont worry just file the income tax and get your refund of tax if u not exeed the exemption limit deductions from section 80c to 80u

      Reply
      1. arun kumar

        In ITR 2A, in income from other sources, where to fill this income received from commission under section 194H. Is it interest or dividend? Or should I fill it in 1d2 there is a option to insert a description.
        Since this income is less than 5000, can I declare it as an exempt income in schedule EI.And in this EI page under which option? Please guide.

        Reply
  8. Ranjan Panda

    If somebody is getting income from Amway company by selling Amway products and getting TDS u/s 194H(Commission & Brokerage) then in which head ITR should filled up?Is it(ITR1)income from other sources?Pls.suggest!

    Reply
  9. Animesh

    Is Sales commission to an agent of non Indian origin paid from India is taxed in India ? ie is TDS deducted for such payments ?

    Reply
  10. Raj

    I have received a payment as a discount amount from broker for booking a flat> broker has made the discount payment after deducting 10% TDS and this amount is being reflected in my form 26AS,under section 194H.

    My query is that whether i have to add this discount amount in my income and pay the income tax also.

    Reply
  11. Himanshu

    I am paying commission for April to june in July at what rate should i deduct tds?
    Rate has changed from 1st june 2016, may i charge 10% for april & May and 5% for June ?

    Reply
  12. kumar

    i have commission & brokerage income u/s 194H, which ITR form should i fill while filing my return of income

    Reply
  13. POR SELVI A

    My Agency is under proprietorship firm Received commission for Rs.200000 in 194h Section of brokerage and commission. Now I want to know whether Service tax is applicable for this section Please Reply me this is urgent.

    Reply
  14. s n singh

    Sir
    I have gotten commission from Punjab Technical University under section194H . I want to know that whether this commission is applicable for service tax. Kindly reply me.
    Thanking you

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Captcha *