Commission TDS: 2% Rate, ₹20,000 Threshold and Gross Reporting
Reviewed by CA Nikhil Gupta · Last reviewed 2 August 2026
Resident commission or brokerage generally attracts 2% TDS once annual payment/credit exceeds ₹20,000, subject to payer-category exceptions.
The recipient reports gross commission and claims TDS credit.
For the connected rule or filing step, see TDS Calculator and Common Rate Finder — FY 2026–27.
Legal or Computational Framework
Governing rule
Insurance commission and lottery-ticket commission have separate categories. Employee sales commission is salary, not section 393 commission/brokerage.
Correct calculation method
Classify relationship and payment; aggregate threshold; deduct at credit/payment; reconcile gross income and TDS.
Step-by-step workflow
- Classify relationship and payment.
- aggregate threshold.
- deduct at credit/payment.
- reconcile gross income and TDS.
- Reconcile the input with official statements and supporting records.
- Calculate both legal eligibility and final tax impact.
- Record the effective date and review trigger.
Worked example
Gross agency commission ₹5 lakh with ₹10,000 TDS is reported as ₹5 lakh business receipt, not ₹4.9 lakh.
The example is an illustration, not a substitute for the taxpayer's facts. A change in status, period, payment mode, document, city, asset, relationship or scheme can change the result.
Why generic pages get this wrong
Search pages often state a rate or limit without identifying the governing base. The calculation must distinguish gross receipt from taxable profit, tax from TDS, a deduction from an exemption, salary from business income, and an accounting entry from the tax treatment.
Decision matrix
| Decision point | Required treatment |
|---|---|
| Legal year | Use the Act, rules and notification effective for the income or transaction period |
| Taxpayer category | Confirm residence, age, entity, employee/business status and regime |
| Calculation base | Use the statutory definition rather than CTC, net bank receipt or accounting label |
| Ceiling or rate | Apply actual-amount, percentage, shared, lifetime and gross-income limits in sequence |
| Documentation | Link every input to an invoice, statement, contract, certificate or official record |
| Final output | Show tax, surcharge, cess, interest and TDS/TCS credits separately |
Entity and topical coverage
This page is written around the entities and concepts search engines expect for the topic: commission, brokerage, section 393, TDS, business income. They are used only where relevant and are connected to the live calculator and knowledge hub rather than repeated mechanically.
What Generic Pages Miss
- Using 44AD.
- Reporting net after TDS.
- Confusing employee commission.
- Missing GST/RCM rules.
- Deducting personal selling expenses.
Practical Documentation Checklist
- Agency agreement
- Commission statements
- TDS certificate
- GST records
- Expense evidence
- Gross-income reconciliation
For the complete rules on this topic, see the core guide: Commission Income Tax Treatment and TDS FY 2026-27.
See the broader Income-tax Act 2025 study guide hub for related rules and calculators on this topic.
Finin2min Summary
Resident commission or brokerage generally attracts 2% TDS once annual payment/credit exceeds ₹20,000, subject to payer-category exceptions. The recipient reports gross commission and claims TDS credit.
Finin2min rule: establish eligibility, calculate transparently, and preserve an audit trail.
Frequently Asked Questions
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Income Tax
- Official starting point
- www.incometax.gov.in