Government Schemes•5 min read
New 194H TDS Rules: 2% Rate & ₹20,000Limit Explained
Guidance by StartupFlora
Understand the latest 2025 TDS rules on commission and brokerage under Section 194H, including rate changes, limits, exemptions, and examples explained simply for businesses, agents, and professionals.
Four key benefits of understanding Section 194H
1. Lower TDS Rate (Now 2%)
2. Higher Threshold Limit
3. No TDS on Certain Transactions
4. Simple Deduction Rules
What Sets Section 194H Apart?
Section 194H (Commission)
Section 194A (Interest)
Section 194C (Contractors)
Purpose
TDS on commission & brokerage
TDS on interest income
TDS on contractor payments
TDS Rate
2% (20% if no PAN)
10%
1%–2%
Threshold
₹20,000
₹40,000 (banks)
₹30,000 (single payment)
Who Deducts?
Companies, firms, large individuals
Banks & payers of interest
Businesses making contract payments
Exemptions
Insurance commission, securities brokerage, trade discounts
Interest paid by post office savings, NRE account interest
Personal payments, small contracts
Applies on?
Intermediary services
Interest on deposits & loans
Work contracts, services
What Sets Section 194H Apart?
Understanding Commission & Brokerage
Who Must Deduct TDS Under Section 194H?
Latest TDS Rate & Threshold (2024–2025 Update)
Understanding Commission & Brokerage
Who Must Deduct TDS Under Section 194H?
Latest TDS Rate & Threshold (2024–2025 Update)
Who Must Deduct TDS Under Section 194H?
Commission Threshold
Payer is
Latest TDS Rate & Threshold (2024–2025 Update)
TDS Rate
Threshold Limit
How to Apply for Lower/Nil TDS (Section 197)
Apply using Form 13
Info required:
If approved:
Key Points to Remember
TDS applies only above ₹20,000
GST is excluded while computing TDS
TDS applies even on retained commission
Missing PAN → 20% TDS
Govt deductors must deposit same day
Wrong TDS may cause Section 200A CPC notices
FAQs
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₹20,000 per year.
2% (20% if no PAN).
Usually taxable under business income.
Yes, 100%.
No, TDS is only on the base commission amount.
No. Trade discounts are not covered.
194H → commission
194A → interest
Yes, if they exceed the Section 44AB turnover limit.
At credit or payment, whichever occurs first.