Section 194H TDS on Commission or brokerage


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As per section 194H: Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding fifteen thousand rupees shall, at the time of credit of such income to the account of the payee 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, deduct income-tax thereon at the rate of five per cent.

Summary of Section 194H of the Income Tax Act
  • Deductor/ Payer: Any person (Including Individual/HUF if they are liable to audit u/s 44AB)
  • Deductee/ Payee: Resident person
  • Nature of Payment: Any income by way of commission or brokerage. (It does not include insurance commission referred to in section 194D)

Point to be noted:

    • Commission or brokerage include any payment:
      • received or receivable
      • directly or indirectly OR
      • by a person acting on behalf of another person
    • TDS on commission or brokerage includes:
      • for services rendered (not being professional services), or
      • for any services in the course of buying or selling of goods, or
      • in relation to any transaction relating to any asset, valuable article or thing, except securities
  • Threshold Limit: Exceeding Rs. 15,000/-
  • Rate of TDS:
    • TDS is required to be deducted @ 5 %
    • If the recipient does not furnish his PAN to the deductor, tax will be deducted @ 20%.
  • Time of deduction:
    • Deductor is required to deduct TDS within earlier of the following dates:
      • At the time of credit of such income to the account of the payee or
      • At the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode
  • No TDS is required to be deducted:
    • If aggregate of the amounts of such income paid during the financial year is is Rs. 15,000/- or less.
    • Any commission or brokerage payable by Bharat Sanchar Nigam Limited (BSNL) or Mahanagar Telephone Nigam Limited (MTNL) to their public call office franchisees.
  • Explanation —For the purposes of this section, —
  • “commission or brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;
  • the expression “professional services” means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA;
  • the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
  • where any income is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

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