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Tds commission

Siddu Reddy (Accountant) (69 Points)

26 February 2016

Dear experts,

We paid commission of Rs. 2000 on sales in Feb-15. and we are not sure whether commission liability arises or not in March depends on sales.

Now my question is party is not allowing to deduct TDS for Feb since this is under limit and saying deduct TDS when it crosses Rs.5000/- exemption limit in a year.

If commission amount crosses Rs. 5000/- then we will be defaulters for Feb Month.

Kindly advise what to be done.

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11 Replies

ujjaishravan (accountant) (212 Points)
Replied 26 February 2016

while filing the return, you have show tax deduction for the first payment as "0" and you should select Threshold remarks., and if you pay in march and that payment exceeds the overall limit then you have to deduct 10% on such payment.

sundeep (Tax Professional) (23 Points)
Replied 26 February 2016

Dear Siddu,

It will not be considered as default. You need to deduct TDS only after crossing the basic limit. While filing TDS returns you need to show the transaction against which TDS had been deducted.

Amit Kanunga (Article Assistant and Post Gradute) (644 Points)
Replied 26 February 2016

Originally posted by : Siddu Reddy
	Dear experts, We paid commission of Rs. 2000 on sales in Feb-15. and we are not sure whether commission liability arises or not in March depends on sales. Now my question is party is not allowing to deduct TDS for Feb since this is under limit and saying deduct TDS when it crosses Rs.5000/- exemption limit in a year. If commission amount crosses Rs. 5000/- then we will be defaulters for Feb Month. Kindly advise what to be done.

Under the following circumstances TDS u/s 194H is not deductible?

(1) No deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to the payee, does not exceed Rs. 5,000 (Rs. 2,500 upto 30.06.2010)

(2) No tax shall be deducted on any commission or brokerage payable by Bharat Sanchar Nigam Ltd. or Mahanagar Telephone Nigam Ltd. to their public call office franchises (Third proviso to section 194H inserted w.e.f. 1-6-2007)

Rishikesh Mishra (Finance Head) (23 Points)
Replied 26 February 2016

There would not be any default. You may deduct the TDS after crossing the limit of Rs 5000/-

CA Prateek Garg (CA in Practice) (1447 Points)
Replied 26 February 2016

Liability to deduct TDS arise only when amount likely to be paid or credited during the year exceeds the specified limit

Since amount for M/o of Feb is Rs. 2000 only hence it is prudent to expect that total amount of commission for the year would not cross Rs. 5000.

Now if suppose if amount for the m/o goes more than Rs. 3000 then it will not be considered as short deduction for the M/o Feb.

Ashish Bansal (CA) (936 Points)
Replied 26 February 2016

Agree with all above replies. Liability to deduct TDs arise only when payment exceeds the threshold limit.

Siddu Reddy (Accountant) (69 Points)
Replied 27 February 2016

Thanks for all your replies .

but small confusion, Suppose Commission paid in FEb is Rs.2000/- and In march Rs. 4000/-

How much of TDS to be deducted in March-15.

is it

1) 400/- on Rs. 4000 of MArch

2) 600/- on Rs. 4000 ofMarch +2000 of Feb

3) 100/- on (6000 less Exemption limit Rs. 5000) i.e Rs. 100

Kindly clear this doubt.

sprasadarao (Accounts Manager) (31 Points)
Replied 27 February 2016

Dear Sidhu

At the time of exceding the limit, on that day we need to calculate the TDS on total amount paid during the period.

For Example you paid Rs.2000 in the month of Feb ( under the examption limit) and you again paid Rs.4000/- in next month , then your you are liabl to pay tax for the month of March i.e Rs. 600/-