Hi guy’s
This is Ravi Varma, in this article I will tell you about section 194H.
Let’s start,
What is the commission?
When we need something that we cannot get directly, then for this we need someone who will do this work for us and that person takes a commission from us to do this work. And in exchange for this commission, that person does my work.
According to section 194(H) if we pay commission to any person and if the limit of commission crosses the threshold limit set by the government then we have to deduct 5% TDS on that amount.
Note point***** Threshold limit of a commission is 15000 and the Commission rate is 5%.
Example:- If we request a person to do our work, then that person takes a commission of 25000 rupees from us for doing his work.
So according to section 194(H) if the commission limit exceeds 25000 then we have to charge 5% TDS on it and deposit that money to Govt.
25000*5% of commission = 25000*5/100 = 1250
One practical aspect that deserves more attention is the operational side of Section 194H compliance. In many organizations, the biggest challenge isn’t calculating the TDS rate—it’s ensuring commission entries, vendor ledgers, AIS, Form 26AS, and quarterly TDS returns all reconcile correctly. Even a small classification error can create unnecessary notices or vendor disputes months later. It would also be useful to discuss how businesses can automate these checks within their accounting or ERP systems to reduce compliance risks as transaction volumes grow.