In this part of our TDS series, we’ll touch Section 194G & Section 194H – 2 important tax deduction provisions which are as follows:

  • TDS on Commission on Sale of Lottery Tickets: Section 194G
  • TDS on Commission or Brokerage: Section 194H

Section 194G: TDS on Commission on Sale of Lottery Tickets

We bet, at-least once in your life you would’ve thought of buying a lottery ticket and waiting for a chance to win. Lottery tickets are an attractive way among many people throughout India to try their luck.
But you will be surprised to know that the ticket seller (or agent) who sell lottery tickets has to follow the provisions of the tax deduction. Wonder how? Let’s see how provisions of section 194G work.

Who is required to deduct TDS u/s 194G?

As per section 194G, any person who pays an income by way of commission or remuneration or prize to a person who sells lottery tickets (also stock, distribute or purchase) is required to deduct TDS.

What is the rate & time of tax deduction u/s 194G?

The rate of tax deduction u/s 194G is 5%. And the time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).
Also, no TDS is required to be deducted where the amount of such payment does not exceed Rs.15000.


Section 194H: TDS on Commission or Brokerage

Whenever we hear the term “commission” or “brokerage”, the first thing which comes to our mind is a salesman, walking door-to-door and selling products. And this in-turn helps him/her earn income in the form of commission.
This thinking is right (although not entirely but only to some extent) as commission or brokerage is not limited to a single dimension.

What is commission or brokerage?

This simply means any payment (income) received by a person who is acting on behalf of another person for providing services (like buying or selling goods; entering into transactions relating to any asset, valuable article or thing excluding securities) is called as ‘commission’ or ‘brokerage’.

Who is required to deduct TDS u/s 194H?

Anyone (but not an individual or HUF) who pays to a resident, an income by way of commission or brokerage is required to deduct tax at source.
It is important to note that, such commission will not include insurance commission which is liable to TDS u/s 194D.
Also, if an individual or HUF becomes liable to audit u/s 44AB (a) and (b) then they are also required to deduct tax u/s 194H.

What is the rate & time of tax deduction u/s 194H?

The rate of tax deduction u/s 194H is 5%. And the time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).

No TDS will be Deducted in Following Cases:
  • When the amount of payment made (at once or total during the whole financial year) does not exceed ?15000.
  • Any brokerage or commission amount paid by BSNL/MTNL to their public call office franchisees.

Frequently Asked Questions

Q- What is Section 194la?

Ans. Section 194LA is that TDS shall be deducted on the consideration received on compulsory acquisition of immovable property other than agriculture land


Q- What is the rate of TDS on brokerage?

Ans. TDS rate on commission shall be the 5%


Q- What is Section 194d?

Ans. Section 194D is for the TDS on insurance commission deducted by the insurance companies of their agents.


Q- How many types of TDS is there?

Ans. Generally 2 types of TDS is deducted by the deductor i.n TDS on salary and TDS other than salary.


Q- What is Section 194da?

Ans. Any sum received by the resident indian upon their maturity of life insurance policy other than the amount included in income under section (10D) of section 10 will be liable for TDS.


Q- What is Section 194a?

Ans. This section deals with the amount of TDS deducted on interest other than interest on securities.


Q- What is ITR exempt income?

Ans. ITR exempt income is INR 2.5 lakh providing you do not own any property outside India and you are not the beneficiary of any property outside India.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.