Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

[Section 194H]- TDS on Commission and Brokerage

[Section 194H]- TDS on Commission and Brokerage
[Section 194H]- TDS on Commission and Brokerage

1.   Who is liable to deduct TDS :

Any person, (other than 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 1 94D) 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, are also required to deduct tax at source. [Second proviso to section 1 94H]

2.   When TDS is to be Deducted:

It will be deducted at the time of credit of such income to the account of the payee or to any account, whether called suspense account or by any other name 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.

3.   Rate of TDS for financial years 2019-20 and 2020-21:

The rate of TDS shall be :        5%.

Notes:

1.  No surcharge or health and education cess shall be added to the above rates. Hence, tax will be deducted at source at the basic rate.

2.  The rate of TDS will be 20% in all cases, if PAN is not quoted by the deductee.

4.   Where No Tax is to be Deducted at Source:

(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 .

See also  TDS from Salary [Section 192]

(2)     No deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Ltd. or Mahanagar Telephone Nigam Ltd. to their public call office franchisees.

5.   Where the Tax is either Not to be Deducted or to be Deducted at Lower Rate [Section 197 and Rules 28 and 28AA]

The assessee to whom commission and brokerage is payable may make an application in Form No. 13 for obtaining a certificate for deduction of tax at any lower rate or no deduction of tax, as the case may be.

An application by a person for grant of a certificate for the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be, under section 197(1) shall be made in Form No.13 electronically,—

(i)         under digital signature; or

(ii)        through electronic verification code.

Where such certificate is given, it will be valid for such period of the previous year as may be specified in the certificate and the person responsible for paying such commission or brokerage, until such certificate is cancelled by the Assessing Officer, deduct income-tax at the rate specified in such certificate or deduct no tax, as the case may be.

The certificate for deduction of tax at any lower rates or no deduction of tax, as the case may be, shall be issued except in certain cases direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.

See also  Rates for TDS ( Deduction of Tax at Source) in case of a Person other than a Company for Financial Year 2020-21 (Assessment Year 2021-22)

However, as per section 206AA(4), no certificate under section 197 shall be granted unless the application made in Form No. 13 under that section contains the Permanent Account Number of the applicant.

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