The rules about TDS on commission and brokerage have been restructured under the Income-tax Act of 2025. Therefore, the previously applicable Section 194H of the IT Act, 1961, is now subsumed under Section 393(1) Table SI. No. 1(ii), with the effective date of 1st April 2026.
The tax deduction on insurance commissions has not changed significantly; however, the new Act provides a clearer, table-based classification.
TDS Section 393(1): Mapping and Reporting
| New Section Under IT Act 2025 | 393(1) |
| Table Relation | Table SI. No. 1(ii) |
| Nature of Payment | Other Brokerage or Commission |
| Earlier Section Under IT Act 1961 | 194H |
| IT Return Form | 26Q |
| Code For IT Return Filing | 1006 |
TDS Applicability on Other Commission or Brokerage
Any person liable to pay income to a resident via other brokerage or commission is required to deduct tax at source.
This covers payments made or expected, either directly or indirectly, by a person representing another for services provided or for transactions involving the purchase or sale of goods or assets. It excludes insurance commission, which is covered under a separate provision.
When to Deduct TDS on Commission?
TDS is deducted at the earliest of the following instances:
- Time of credit of such payment to the account of the payee
- Time of payment by cheque, draft, cash or any other method
Applicable TDS Rate on Commission and Brokerage
The appropriate TDS rate is as follows:
- 2% on other brokerage or commission fees
When the deductee does not provide their PAN, tax will be deducted at the higher rate of:
- The rate determined above, or
- 20% in case of an unfurnished Permanent Account Number (PAN) as per applicable provisions
Recommended: How TDS Software Simplifies Tax Deduction for Professionals
Threshold Limit for TDS Deduction
No Tax Deducted at Source (TDS) needs to be deducted if the total brokerage or commission credited or paid during the financial year (FY) does not surpass ₹20,000.
Types of Payments Subject to TDS
Under this provision, the below-mentioned types of payments are included-
- Amounts obtained or receivable on behalf of other individuals
- Fees for services in the course of purchasing or selling goods
- Payments for services generated (excluding professional services)
- Commerce of assets, useful articles or items (excluding securities)
TDS Exemptions Under Section 393(1)
In the below-mentioned cases, TDS under this section is not to be deducted-
- Insurance commission protected under a particular provision
- Brokerage or commission associated with securities transactions
- Matters where the payee maintains a NIL or lower tax deduction certificate
- Payments made by TV channels or newspapers to advertisement agencies
- Other brokerage or commission does not surpass INR 20,000 during the FY
- Commission reimbursed by an employer to an employee
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