When any person pays any sum by way of commission or brokerage to a resident is liable to deduct TDS on such commission or brokerage @ 10%. TDS should be deducted either at the time of credit or payment whichever is earlier.
TDS need not to be detected if the commission or brokerage paid does not exceed Rs.5000/-in a financial year.
Individuals, Hindu Undivided Families (HUF) need not to deduct TDS if their total sales, gross receipts or turnover from the business or profession within the monetary limits specified under clause (a) or (b) of Section 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid.
For example, if the monetary limit exceeds in the financial year 2012-13, and the commission is credited or paid in the year 2013-14, then TDS should be deducted on such commission or brokerage in the year 2013-14.
The monetary limits specified in the Section 44AB is Rs.1 Crore from business and Rs.25 Lakhs from profession.
Commissions paid by Insurance companies are not liable for deduction under this section. Insurance commission comes under the section 194D.
Further no deduction shall be made if the commission or brokerage paid by Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) to their public call office franchisees.
The words "commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities.
The rate of TDS to be deducted is 10%, if PAN has not been submitted by the person receiving the payment; TDS is to be deducted at 20% on the payment.
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