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Section 194H- Commission or brokerage

The terms "commission" or "brokerage" often bring to mind a door-to-door salesman earning income. However, this view is only partially correct as these concepts extend beyond just this scenario.


What is commission or brokerage? 

It's the payment received by someone for providing services on behalf of another, such as buying or selling goods or handling transactions. This is known as 'commission' or 'brokerage.'


Who needs to deduct TDS u/s 194H? 

Any entity (excluding individuals or HUFs) paying commission or brokerage income to a resident must deduct TDS. However, this doesn't apply to insurance commission, which falls under TDS u/s 194D. 

Individuals or HUFs subject to audit u/s 44AB (a) and (b) also need to deduct TDS u/s 194H.


Tax Deduction Rate & Time u/s 194H 

The tax deduction rate under section 194H is 5%. Deduction is made before income is credited to the payee's account or any form of payment is made.


When is brokerage exempt under Section 194H? 

No TDS is required if the yearly commission or brokerage is less than ₹15,000. This applies to each recipient per financial year. However, if payments exceed ₹15,000 to a single recipient, TDS applies to the total amount, not just the excess.

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