TDS

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When an employer pays commission to an employee, TDS is generally deducted under Section 192, as commission is considered part of salary. This means TDS is not applicable under Section 194H. The TDS rate for salary is not fixed but calculated at the average rate of income tax based on the rates in force for the financial year. The employer can adjust any shortfall or excess TDS in subsequent deductions, with the liability arising at the time of actual salary payment.

kazimohmad masaud

kazimohmad masaud (Querist)
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25 April 2020 If employer gives commission to his employee so tds will be deducted u/s 194H ? What will be rate of tds in such a case ?

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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25 April 2020 Commission attract TDS@ 5%

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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25 April 2020 Commission paid to employees partakes character of salary and TDS is applicable only u/s 192 not under Section 194H so tds should be deducted on applicable rate

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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25 April 2020 Deduct per section 192.

PARAS CHHAJED

PARAS CHHAJED

(Expert)
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28 April 2020 Commission paid to employee is part of salary only and TDS to be made u/s 192 only and u/s 194H. The employee cannot claim any expenditure out of commission received from his employer.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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06 May 2020 In case of TDS on salary, there is no fixed rate of TDS, however, the Deductor / employer is required to deduct tax at source at the average rate of income tax.

‘The Average rate of Income Tax’ is computed based on the rates in force during the relevant Financial Year.

It is pertinent to note that the employer i.e., the Deductor has been bestowed the right to make appropriate adjustment for any type of shortfall / excess in the TDS already deducted in the subsequent TDS deduction.

The liability to deduct TDS arises at the time of actual payment of Salary. It is important to note that the liability arises at the time of payment of Salary and not at the time of accrual.

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