1. What is Sales Commission & TDS?

Sales commission is a payment made to an employee or agent based on the value of sales achieved. In India, Tax Deducted at Source (TDS) is required to be deducted from such commission payments under Section 194H of the Income Tax Act.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• Sales Amount — Total sales value in Indian Rupees (INR)
• Commission Rate — Percentage agreed for commission
• TDS Rate — Percentage for tax deduction (typically 5% or 10%)

Explanation: The calculator first computes the gross commission, then deducts TDS at the specified rate to show the net payable amount.

3. Importance of TDS on Commission

Details: TDS on commission is mandatory in India for payments exceeding ₹15,000 in a financial year. The deductor must deposit this TDS with the government and issue Form 16A to the payee.

4. Using the Calculator

Tips: Enter the sales amount in INR, commission rate as percentage (e.g., 5 for 5%), and TDS rate (typically 5% or 10%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the current TDS rate on commission in India?
A: The standard rate is 5% under Section 194H for resident individuals. For non-residents, different rates may apply.

Q2: When is TDS not applicable on commission?
A: TDS is not required if the commission payment to a resident individual is ₹15,000 or less in a financial year.

Q3: Can the commission recipient claim TDS refund?
A: Yes, if total tax liability is less than TDS deducted, the excess can be claimed as refund while filing income tax return.

Q4: What is the due date for depositing TDS on commission?
A: TDS must be deposited by the 7th of the following month in which deduction was made.

Q5: Is PAN mandatory for commission payments?
A: Yes, PAN of the recipient must be obtained, otherwise TDS will be deducted at higher rate of 20%.