Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

TDS on brokerage commission charges

834 views

Save Share

sujin

accounts executive

222 Points Posted on 01 February 2023

dear experts,
our company started a new office for rental near by our plant for this we given brokerage charges to vendor this service comes under which section under tds

Replies (5)

Quick Summary

This discussion clarifies the applicable TDS section for brokerage commission charges paid to a vendor for a new office rental. While Section 194H typically covers TDS on commission or brokerage at 5% for amounts exceeding £15,000 annually, the applicability hinges on the recipient's residency. If the vendor is not a resident of India, TDS would be deducted under Section 195 at the applicable rate. However, the consensus clarifies that 'person' under the Income Tax Act has a broad definition including companies, meaning Section 194H is generally applicable, and the vendor is responsible for TDS deduction.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

212450 Points Posted on 01 February 2023

Section 194H of IT act deals with TDS deduction on the payment of commission or brokerage.

It mandates tax deduction by the person (other than individual/HUF) responsible for paying commission or brokerage to resident persons at the rate of 5% when the amount exceeds Rs.15000 in a year.

sujin

accounts executive

222 Points Posted on 01 February 2023

But it is the company not resident person

Dibyendu Majumder

161 Points Posted on 01 February 2023

Then Deduct TDS U/S 195 as per applicable rate

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

212450 Points Posted on 01 February 2023

Originally posted by : sujin
	But it is the company not resident person

Normally a ‘Person’ refers to an ‘Individual’, however under Income Tax, the person has broader meaning and coverage. For the purpose of charging Income-tax, the term ‘person’ has been defined under Section 2(31) of the Income Tax Act, 1961 to include Individuals, Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, Companies, Local authority and any Artificial Juridical Person (AJP).