Section 194H TDS on Commission FY 2026-27: Rate, Threshold & How to Claim Credit
Section 194H mandates TDS deduction at 5% on commission and brokerage payments when the amount exceeds ₹15,000 in a financial year. Insurance agents, stockbrokers, travel agents, and anyone earning commission income must understand this provision – both as recipients and payers.
What is Section 194H?
Section 194H of the Income Tax Act requires any person (other than an individual or HUF not liable to audit) who pays commission or brokerage to a resident to deduct TDS at 5% at the time of credit or payment – whichever is earlier.
Section 194H – Key Details
| Parameter | Details |
|---|---|
| TDS Rate | 5% (2% if PAN not available – higher deduction) |
| Threshold | ₹15,000 in a financial year (total commission from one payer) |
| Who deducts | Any person/company paying commission (except individuals/HUF not subject to audit) |
| When to deduct | At credit or payment – whichever is earlier |
| Certificate issued | Form 16A (TDS certificate for non-salary) |
What Constitutes Commission/Brokerage Under 194H?
- Commission paid to insurance agents (LIC, general insurance)
- Brokerage paid to stockbrokers, sub-brokers
- Commission to travel agents, tour operators
- Commission to real estate agents (not rent)
- Marketing commissions, referral fees
- Any payment received for rendering services in the course of buying or selling goods or in relation to any transaction relating to an asset, valuable article or thing
What is NOT Covered Under 194H?
- Insurance commission to agents covered under Section 194D (separate TDS section)
- Commission on securities transactions exempt under Section 194H (covered by other sections)
- Payments to individuals/HUF deductors who are not subject to tax audit
- Commission from government securities, RBI bonds
TDS on Commission – Practical Examples
- Amazon Seller Commission: Amazon deducts 5% TDS on seller commissions exceeding ₹15,000
- Mutual Fund Distributor: AMC/distributor pays trail commission – if > ₹15,000 annually, 5% TDS applies
- Real Estate Broker: Developer paying brokerage > ₹15,000 deducts 5% TDS before payment
- Franchise/Dealer: Company paying dealer incentives/commission deducts TDS under 194H
How to Claim 194H TDS Credit
If TDS was deducted under 194H from your commission income:
- Collect Form 16A from the deductor (must be issued quarterly)
- Verify the TDS credit in your Form 26AS / AIS
- Include commission income in your ITR (under “Income from other sources” or business income)
- Claim TDS credit in the “Tax Details” schedule – the TDS is set off against your total tax liability
Form 15G/15H to Avoid TDS on Commission
If your total income is below the taxable limit, you can submit Form 15G (below 60 years) or Form 15H (senior citizens 60+) to the payer to request nil TDS deduction. However, this is only valid if your estimated total income for the year does not exceed the basic exemption limit.
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