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Summary of Provisions related to TDS on Commission (Section 194H) and TDS on Rent (Section 194I).
It will be helpful for Revision for Students…..
Section 194H (TDS ON Commission payments)
- The Section lays down that TDS should be deducted on Commission payments.
- The rate of TDS is 5% irrespective of payer or payee type
- Threshold : Rs. 15000
Imp Note : The TDS is to be deducted on taxable amount before adding GST
- Ex 1 : If commission paid 20000, TDS will be 1000, but if Commission paid 14000, TDS will be Nil
‘Commission’ means ?
- 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
Who has to deduct TDS ?
- Any Person, except Individuals and HUF
- Individuals/HUF/AOP/BOI if its turnover of business exceeds 1 crore in last year (or 50 lacs in case of turnover from Profession)
- Payee should be a Resident
Note : Earlier it was ‘covered under Tax Audit’, Now its turnover based
Time of TDS deduction:
- The TDS to be deducted at the time of payment or credit( booking of Invoice) whichever is earlier
- If credit is not done to Party account but any other account like Suspense account, still TDS becomes applicable
TDS under this Sec not applicable on insurance commission (194D applies)
Section 194I (TDS on Rent Payments)
The Section lays down that TDS should be deducted on Rental payments.
- By Whom ?
- By any Person, Not being Individual or HUF
- Individuals/HUF if its turnover of business exceeds 1 crore in last year (or 50 lacs in case of turnover from Profession)
Note : Earlier it was ‘covered under Tax Audit’, Now its turnover based
- For whom ? – Any Resident payee
- Rental payment means?
Rental Payments can be divided into 3 types :
- Rent on Plant and Machinery – TDS @ 2%
- Rent on Land and buildings – TDS @ 10%
- Rent on Furniture and Fixtures – TDS @ 10%
- Threshold : 240000 p.a.
Imp Note : The TDS is to be deducted on taxable amount before adding GST
- The TDS to be deducted at the time of payment or credit( booking of Invoice) whichever is earlier
- If credit is not done to Party account but any other account like Suspense account, still TDS becomes applicable
- Rent includes Sub-letting also, hence even if payee is not the owner , TDS will be deducted
- TDS not to be deducted if Rent paid to Real Estate Investment trust (REIT) for a Real Estate Asset owned by it
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Author Bio
Income tax department at Bangalore and Tirupati not responding to my grievances and d E mails for the last 18 months @ rectification request is still pending @ refund amount not deposited to my bank account @ the amount was adjusted to tje outstanding demand @ Even though the notice under section 154 is not correct and not genuine @ they are creating mental agony to Pensioners / senior citizens @ we are corresponding with income tax department several times but they are not solving my problem.
Padaga Chalapathi Rao
Aftpp2254h
Pensioner
Senior citizen
Kakinada
533003
9441435566
Please take necessary Action.
Email
cpadaga gmail.com