As per section 194H, tax has to be deducted on commission and brokerage at the time of payment or credit whichever is earlier.
Commission and brokerage includes any payments received or receivable directly or indirectly by a person acting on behalf of another person for services rendered (other than professional services) or for any other 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.
TDS on insurance commission is deducted based on the provisions of section 194D. This means in this case section 194H is not applicable.
Person responsible for TDS u/s 194H
Any person responsible for making payments of commission and brokerage is required to deduct tax at the time of payment or credit whichever is earlier.
However, an individual or HUF whose accounts are not subject to tax audit under section 44AB in the preceding financial year is not required to deduct tax from payments of commission and brokerage.
Rate of TDS and when tax not to be deducted
Tax not to be deducted on commission and brokerage if aggregate payment does not exceed Rs. 15,000 during the financial year.
Rate of TDS on commission and brokerage is 5%.
If aggregate payment exceeds Rs. 15,000 during the financial year, tax has to be deducted at the rate of 5% at the time of payment or credit whichever is earlier.
TDS provisions not applicable on commission or brokerage payable by Bharat Sanchar Nigam Ltd ( BSNL) or Mahanagar Telephone Nigam Ltd (MTNL) to their public call office franchisees.
Under section 194H, tax shall be deducted at the rate of 5%. Surcharge, education cess or SHEC shall not be added to this rate. If permanent account number has not been quoted by the deductee, then rate of TDS is 20%.
After deducting the TDS amount, the person responsible for such deduction is required to file quarterly TDS return with the IT department. This return will have details such as the amount of TDS, amount on which tax has been deducted and PAN of the person to whom payments are made.
If TDS amount has been deducted from your commission or brokerage, then after filing of the quarterly return, you can see it online in your form 26AS. The person responsible for deductions will issue form 16A to you as a certificate of deduction. If you are not liable to tax, refund can be claimed by filing your return of income.
