Section 194H of the Income Tax Act is levied on income through commission, except commissions on insurance sales.
TDS deduction rate
Currently, 5% TDS is applied on a payment without any surcharge or education-related cess. If the person deducting the amount does not provide PAN details, then a TDS of 20% is levied.
No TDS is required if the total brokerage or commission amount is less than Rs. 5000 in a year.
Nil TDS or Lower TDS rate
In some cases, you may not have any taxable income. So if TDS is deducted from your payment, you have to file a refund claim. It can take a while for the refund claim to be processed and for you to receive the refund.
To prevent funds from being blocked, you can obtain a nil or lower TDS certificate from an income tax assessing officer. This certificate will certify that the standard TDS rates won’t apply to you.
To obtain this document, a taxpayer has to submit the following –
1. Name and address
2. PAN details
3. Payment details
4. Income details for the last 3 financial years
5. Projected income for the current financial year
6. Tax payment details of the last 3 years and current financial year
Exemptions under Section 194H
You will be exempted from section 194H
· If brokerage or commission is paid by BSNL or MTNL towards their public franchisees
– income from recurring deposits
· If your employer is paying you (then Section 192 will be applicable)
· If the income is through insurance sales
Time Limit for TDS deposit
1. For TDS deducted between April and February, the TDS has to be deposited within the first seven days of the following month.
2. For TDS deducted in March, it has to be deposited within 30th April.