TDS Under Section 194H – Brokerage & Commission

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What is Section 194H

  • Section 194H of the Income Tax Act is specifically dedicated to TDS deducted on income earned through Brokerage or Commission by any person who is liable to pay to an Indian resident.
  • Point to be noted, that this section does not cover the insurance commission mentioned in section 194D. The TDS should be deducted at the time of payment by cash, cheque or draft.

TDS Deduction Rate

  • The rate of TDS is 5%.
  • Owing to Covid 19, TDS rate has been reduced by 25% for the period till 14th May’ 2020 to 31st March’ 2021
  • In any case, if PAN is missing for deductee, the rate of TDS will be 20%

Commission & Brokerage includes any payment:

  • Received or receivable
  • Directly or indirectly
  • By a person, who is acting on behalf of another person

TDS on Commission or Brokerage includes:

  • For services Rendered, except Professional Services
  • For any services in the course of buying or selling of Goods, or
  • Any transaction relating to any asset, valuable article or thing, excluding Securities

When TDS u/s 194H is not Deductible

  • No Deduction shall be made u/s 194H if the amount or the aggregate amounts of such income to be credited or paid during the Financial Year does not exceed Rs. 15,000/-
  • One can make an application to the assessing officer u/s 197 for Deduction of Tax at lower rate or at a NIL rate

Online TDS/TCS/Demand Payment using Challan ITNS 281

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