TDS on Brokerage charges for commodity trading

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This discussion clarifies whether Tax Deducted at Source (TDS) is applicable to brokerage charges specifically for commodity trading. The consensus is that it is not applicable, as these services are exempt under Section 194H of the Income Tax Act. The explanation further defines 'commission or brokerage' and 'securities' to illustrate why commodity brokerage falls outside the scope of TDS.

BALAMURUGAN GOPAL

BALAMURUGAN GOPAL (Querist)

08 May 2024 Hi

Is TDS applicable to brokerage charges for commodity trading?

Thanks in advance.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

08 May 2024 No. The service is exempt u/s. 194H of IT act.

BALAMURUGAN GOPAL

BALAMURUGAN GOPAL (Querist)

08 May 2024 Thanks for your response, sir. Can you elaborate with some definitions?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

08 May 2024 Explanation.—For the purposes of this section,—

(i) "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;

(ii) the expression "professional services" means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA;

(iii) the expression "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(iv) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

07 September 2024 Good Luck.

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