TDS on Commission or Brokerage under the Income-tax Act, 2025
Key takeaways
- Section 393(1), Table Sl. No. 1 of the Income-tax Act, 2025 governs TDS on commission or brokerage.
- Insurance commission includes remuneration or reward for soliciting or procuring insurance business, including business relating to the continuance, renewal or revival of insurance policies.
- Any person responsible for making payment of insurance commission is covered.
- Commission or brokerage including insurance commission is subject to a threshold limit of ₹20,000.
- TDS on commission or brokerage including insurance commission is deductible at the rate of 2%.
- For commission or brokerage other than insurance commission, the payment must be made by the specified person covered by the provision.
- TDS is required to be deducted at the time of credit or payment, whichever is earlier.
- For commission or brokerage including insurance commission, payments to a resident, the quarterly TDS statement is furnished in Form No. 140.
- The TDS certificate for commission or brokrage payments is issued in Form No. 131.
Introdution
TDS on Commission or Brokerage is governed by Section 393(1), Table Sl. No. 1 of the Income-tax Act, 2025. The provision covers insurance commission as well as commission or brokerage other than insurance commission.
The provisions under the Income-tax Act, 2025 are applicable from 1 April 2026.
1. When is TDS Applicable on Commission or Brokerage?
As per Section 393(1), Table Sl. No. 1 of the Income-tax Act, 2025, where any income by way of commission or brokerage is credited or paid or distributed during the tax year by any person or specified person, the person responsible for paying such income shall deduct income-tax at the prescribed rate, subject to the threshold limit.
The provision covers the following:
(i) Insurance Commission
Any income by way of remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business, including business relating to the continuance, renewal or revival of insurance policies.
Person responsible: Any person.
Rate: 2%
Threshold limit: ₹20,000.
Example
An insurance agent receives ₹35,000 as commission for procuring insurance business.
Since the amount exceeds the prescribed threshold limit of ₹20,000, the TDS provisions applicable to insurance commission are attracted.
TDS shall be deducted at the 2% as prescribed which is ₹700 (2% of ₹35,000).
The provision also specifically covers remuneration or reward relating to the continuance, renewal or revival of insurance policies.
(ii) Commission or Brokerage Other Than Insurance Commission
Any income by way of commission or brokerage, other than insurance commission referred to in Sl. No. 1(i).
Person responsible: Specified person*.