Section 194H — TDS on Commission & Brokerage 2025-26

Updated: 3 June 2026 | Income-tax Act 2025 | Rate: 5% | Threshold: ₹15,000/year

Section 194H requires deduction of TDS at 5% on commission or brokerage paid to a resident when the aggregate exceeds ₹15,000 per financial year. Applies to stockbroker commissions, real estate agent fees, distributor margins, and other agency arrangements. Not applicable to insurance commission (Section 194D) or salary commission (Section 192). Individuals/HUF below the Section 44AB audit limit are exempt from deducting TDS.

5% TDS

Section 194H — TDS at 5% on commission/brokerage above ₹15,000 per year.
No PAN: TDS at 20%. Deduct at time of credit or payment — whichever is earlier. Advance commission: deduct TDS at point of advance.

Section 194H — Key Parameters

Parameter	Details
TDS Rate	5% of commission/brokerage amount
Rate without PAN (Section 206AA)	20% (higher of applicable rate or 20%)
Threshold limit	₹15,000 per payee per financial year
Payment type covered	Commission, brokerage, discount, remuneration for agency services
Payee eligibility	Resident payee only (non-residents: Section 195)
Time of deduction	At credit or payment — whichever is earlier
TDS deposit due date	7th of following month (except March: 30th April)
TDS return	Form 26Q (quarterly)
Certificate issued	Form 16A to payee within 15 days of quarterly due date

Practical Examples of Section 194H Applicability

Transaction	194H Applicable?	Remarks
Stockbroker commission	Yes	Brokerage paid to stock/commodity broker on trades
Real estate agent fees	Yes	Commission to property agent on sale/rental transaction
Distributor margin / trade discount	Yes (if in nature of commission)	Where distributor earns on principal-agent basis
Insurance agent commission	No — use Section 194D	Specific provision for insurance commission
Salary + commission to employee	No — under Section 192	Entire salary package including commission taxed as salary
Professional fee (CA, lawyer)	No — use Section 194J	Professional services: 10% TDS under 194J
Commission to NRI agent	No — use Section 195	Non-resident payments under different section

Commission-Related TDS Sections — Quick Comparison

Section	Payment Type	TDS Rate	Threshold (per year)
194D	Insurance commission	5% (individuals); 10% (companies)	₹15,000
194H	General commission/brokerage	5%	₹15,000
194J	Professional/technical fees	10% (professional); 2% (technical)	₹30,000
194M	Commission/brokerage by individuals/HUF above threshold	5%	₹50,00,000 (total payments)
192	Salary (including commission as part of salary)	As per slab	Basic exemption limit

Section 194H Compliance — TDS Return & Certificate

The deductor must deposit TDS using Challan ITNS 281 — by the 7th of the following month (for March deductions: by 30th April). File quarterly TDS return in Form 26Q within 31 days of quarter end (Q4: 31 May). Issue Form 16A (TDS certificate) to the payee within 15 days of the due date for filing 26Q. The payee can claim TDS credit in their ITR using Form 26AS / AIS.

Frequently Asked Questions

What is Section 194H TDS rate and threshold?

Section 194H requires TDS at 5% on commission or brokerage paid to a resident, when the aggregate amount exceeds ₹15,000 in a financial year. The 5% rate is on the gross commission amount (before deducting any charges). If the payee provides a valid PAN, TDS is 5%. Without PAN, TDS is deducted at 20% (higher of 5% or 20% under Section 206AA). The threshold of ₹15,000 is per payee, per financial year — it applies to the cumulative commission paid, not each individual payment.

Who is required to deduct TDS under Section 194H?

Any person responsible for paying commission or brokerage is required to deduct TDS under Section 194H, EXCEPT: (1) Individuals and Hindu Undivided Families (HUF) whose total sales/turnover in the preceding financial year did not exceed ₹1 crore (business) or ₹50 lakh (profession) — i.e., those not subject to tax audit under Section 44AB. Large individuals and HUFs who exceed these turnover limits must also deduct TDS. Companies, firms, LLPs, and AoPs must always deduct TDS regardless of turnover.

What is the difference between Section 194H, 194D, and 194J for commission?

Key differences: Section 194H covers general commission/brokerage (rate: 5%, threshold: ₹15,000). Section 194D covers insurance commission specifically — paid by insurance companies to agents (rate: 5% for individuals; threshold: ₹15,000). Section 194J covers fees for professional services and technical services (rate: 10% for professionals, 2% for technical services; threshold: ₹30,000). Insurance agents must have TDS under 194D, not 194H. Commission to professionals may fall under 194J if it is in the nature of professional fees rather than mere brokerage.

When should TDS be deducted under Section 194H — at credit or payment?

TDS under Section 194H must be deducted at the earlier of: (1) time of credit to the account of the payee (including credit to "suspense account" or any other account), OR (2) actual payment (cash, cheque, draft, or any other mode). For advance commission: TDS is deducted at the time of advance credit/payment. If commission is credited to the account of the payee (even if not yet paid in cash), TDS obligation arises at that point. This is the same rule that applies to most TDS sections — credit trigger applies first.

What transactions are NOT covered under Section 194H?

Transactions NOT covered under Section 194H: (1) Insurance commission — covered under Section 194D; (2) Commission on salaries — covered as part of salary under Section 192; (3) Commission paid to non-residents — covered under Sections 195/196 depending on nature; (4) Commission paid by individuals/HUF below audit limit (Section 44AB); (5) Payments below ₹15,000 threshold in a financial year; (6) Commission exempt under specific notifications. Note: commodity exchange transactions and depository agent commission may also have specific treatment depending on the nature of services.

TDS Overview Section 194J Section 194D TDS Return Filing Form 26AS File ITR

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