Understanding Section 194H: Income Tax on Commission and Brokerage

Learn about Section 194H and its implications for TDS on commission payments in India.

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Section 194H pertains to the income tax on commission or brokerage. It requires the deduction of TDS at 5% on any commission or brokerage payment exceeding ₹15,000 in a financial year. The deductor must deposit the deducted tax to the government. This helps in tracking and taxing income from commissions and prevent tax evasion.

FAQs & Answers

  1. What is Section 194H of the Income Tax Act? Section 194H pertains to the deduction of income tax on commission or brokerage payments, requiring TDS at 5% on amounts exceeding ₹15,000 in a financial year.
  2. Who is responsible for deducting TDS under Section 194H? The deductor, typically the person or entity paying the commission or brokerage, is responsible for deducting the TDS before making the payment.
  3. What is the threshold limit for TDS deduction under Section 194H? The threshold limit for TDS deduction under Section 194H is ₹15,000 in a financial year; payments above this amount are subject to TDS.
  4. Why is TDS deducted under Section 194H? TDS under Section 194H is deducted to ensure proper collection of tax on income from commissions, thereby preventing tax evasion and ensuring compliance with tax laws.

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