TDS on Commission/Brokerage Under Section 194H

Updates and details for TDS on Commission/Brokerage Under Section 194H:

In this article, I have given the definition of Section 194H and Commission/Borkerage. I have also given the details for TDS on Commission/Brokerage, Who is responsible for deducting tax u/s 194H and also Under what circumstances TDS u/s 194H is not deductible. So, just read the article carefully for more details.

What is Section 194H?

• Section 194H is for income tax deducted on any income by way of commission or brokerage, by any person responsible for paying to a resident.
• Individuals and Hindu Undivided Family who were covered under section 44AB are also required to deduct TDS.
• Section 194H does not include insurance commission referred to in section 194H.

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 or for any services in the course buying or selling or in relation to any transaction relating to any asset; valuable article or thing except securities.

The provisions of Section 194H are not attracted on the following.

• Brokerage or Commission paid to underwriters
• Brokerage and sub-brokerage on public issue of securities
• Brokerage on stock exchange transactions of securities

TDS on Commission/Brokerage:

TDS on Commission/Brokerage is to be deducted by all persons except Individual & HUF. Though 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.

No additional surcharge or education cess is required to be deducted over and above the TDS rates as speciefied. Therefore, TDS should be deducted @5% on the total amount inclusive of Service Tax.

The TDS deducted under Section 194H us 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 Government, 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.

Who is responsible for deducting tax u/s 194H?

Any person, (other than the 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.

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

(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 Rs. 15,000.

(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)

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