India’s tax authorities have recast the rules on tax deducted at source for commission and brokerage, integrating old provisions into a clearer, table-based structure under the Income-tax Act 2025 from 1 April 2026, while maintaining significant exemptions and thresholds.
India’s rules on tax deducted at source for commission and brokerage are being recast under the Income-tax Act 2025, with the old Section 194H of the 1961 law folded into Section 393(1), Table SI No. 1(ii), from 1 April 2026. According to the material supplied by SAG Infotech and supporting legal text, the new structure keeps the basic treatment largely intact while presenting it in a clearer table-based format.
Under the revised provision, tax must be deducted when a resident is paid commission or brokerage, whether the sum is credited or actually paid. The rule covers amounts earned directly or indirectly for acting on behalf of another person in transactions involving goods or assets, although insurance commission continues to sit under a separate rule. Indian Kanoon’s text of Section 393(1)(d) describes the same framework, including the timing of deduction at the earlier of credit or payment.
The rate remains 2% for other brokerage or commission. If the recipient does not provide a permanent account number, the deduction rises to the higher of the normal rate or 20%, in line with the general anti-avoidance rules on missing PAN details. SAG Infotech also says no deduction is required if total commission or brokerage paid or credited in the financial year does not exceed ₹20,000.
The new regime also preserves a series of exclusions. These include insurance commission, securities-related brokerage, payments covered by a lower or nil deduction certificate, reimbursements by an employer to an employee, and certain advertising payments made by television channels or newspapers to agencies. The law also excludes several forms of payment that do not fit the commission-or-brokerage category, such as professional services.
TaxRate.in notes that the current shape of the rule reflects earlier changes under the 1961 Act, when the TDS rate on commission and brokerage was reduced from 5% to 2% from 1 October 2024, and the threshold was later increased to ₹20,000 by the Finance Act 2025. Industry guides, including those from Lexvio and Caclubindia, say the new section largely preserves that policy while bringing the deduction rules into the Income-tax Act 2025’s consolidated structure. For return filing, SAG Infotech identifies Form 26Q and code 1006 for this category.
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