Any person paying commission or brokerage, except:
Individual / HUF whose total sales, gross receipts or turnover ≤ ₹ 1 crore (business) or ≤ ₹ 50 lakhs (profession) during the immediately preceding F.Y.
## Payee
Any resident.
## Threshold
> ₹ 20,000 in a F.Y.
## Rate of TDS
2%
## When to Deduct
At the time of credit OR payment, whichever is earlier.
## Quick Recall Box
Particular
Details
Threshold
> ₹ 20,000 p.a.
Rate
2%
Payee
Resident
Payer exemption
Small Ind/HUF (T/O ≤ ₹ 1 cr business / ₹ 50 L profession)
Worked example
### Example 1
Example: ABC Ltd. pays brokerage of ₹ 50,000 during F.Y. to a resident broker Mr. X.
Solution: Exceeds ₹ 20,000 → TDS @ 2%.
TDS = 2% × ₹ 50,000 = ₹ 1,000.
### Example 2
Example: Mr. P (individual, turnover ₹ 80 lakhs in preceding F.Y.) pays commission of ₹ 30,000 to a broker.
Solution: Mr. P is NOT liable to deduct TDS because his turnover in immediately preceding F.Y. did not exceed ₹ 1 crore.
⚠️ Common exam mistakes
Confusing commission (194H) with insurance commission (194D) — different sections, similar rates
Applying 194H even when individual/HUF payer's turnover is below the threshold
Missing the carve-out for small individual/HUF payers
Bare-Act text Section 194H · Income-tax Act, 1961 · click to expand
Any person, not being an individual or a Hindu undivided family, who is responsible for paying, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit or payment, whichever is earlier, deduct income-tax thereon. Provided that an individual or HUF whose total sales, gross receipts or turnover from business/profession exceeds the prescribed threshold shall also be liable to deduct.