What is TDS?
TDS (Tax Deduction at Source) TDS stands for Tax deduction at source. TDS was implemented to curb the evasion of tax by deducting tax at source only. Under this arrangement, the person who is paying money to someone will deduct some amount from amount payable, deposit it to government and the person of whom such sum was deducted shall claim it while filing Income Tax Return.
What is Brokerage or Commission?
Commission or Brokerage includes any payment received / receivable (directly or indirectly) by a person acting on behalf of another person for – Services rendered (except the professional services); or Any service in the course of buying / selling of goods; or In relation to any transaction to any asset, thing or valuable article (except securities).
Person required to deduct TDS u/s 194H Payer
Every person, except Individual and HUF whose gross receipt in the preceding year did not exceed Rs 1 crore in case of business or Rs 50 Lakhs in case of profession.
Payee
Any Resident Thus, section 194H is not applicable in case of payment of interest to a non-resident. If such payment is made to non-resident then tax will be deducted under section 195.
Which is the due time for deduction?
At the time of credit or payment, whichever is earlier.
Rate of TDS
5 %. If the payee doesn’t furnish his PAN, then TDS is to be deducted at the rate of 20% No surcharge, education cess or SHEC shall be added to the basic rates
Threshold Limit
No TDS where amount does not exceed Rs 15,000 in a financial year.
Note: If the aggregate amount of brokerage or exceed Rs 15,000 in a financial year then TDS will be deducted on the entire amount paid during the financial year.
No TDS under following situations
- Any payment of insurance commission referred to in section 194D.
- When a person make an application to the assessing officer under section 197 for deduction of tax at NIL rate or at a lower rate.
- Any commission or brokerage payable by BSNL or MTNL to their public call office franchisees.
- Payment of commission to employees and employee directors. It shall form part of salary income and is liable to TDS u/s 192, not u/s 194H.
Frequently Asked Questions
| Q-What is threshold limit of TDS on Commission or Brokerage? A- Threshold limit for deduction of TDS on Commission and brokerage is Rs. 15000/- |
| Q- Whether TDS needs to be deducted on amount inclusive of GST? A-No, TDS needs to be deducted only on basic value i.e. value excluding GST. |
If you have any question related to GST, Income Tax, Accounts, Finance or other matters, feel free to ask us. We shall revert to you within 24 hours!
Follow us on Instagram, Twitter and LinkedIn for regular Updates related to GST, Income Tax and Financial matters.
