Is commission income exempt from tax?

Although a commission earner can be referred as an “agent” or “representative”, the individual is regarded as an “employee” in the Fourth Schedule of the Income Tax Act. Commission income is variable income.

Can we show commission income under other sources?

“Commission income falls under the residuary head of income i.e. Income from Other Sources (IFOS). However, if a person is engaged in the commission business, then the income from commission business shall be offered to tax under the head “Income from business and profession” and not under IFOS,” says Dr. Surana.

Are commissions taxable?

Commissions payable to brokers, agents, independent/exclusive sales representatives and marketing agents of companies are now subject to the same rates and rules applicable to professional fees. Previously, commissions are subject to 10\% withholding tax only.

How do I treat commission income in ITR?

If the commission earned is less than Rs 60,000, the deduction on the first year’s commission is 50\% of the commission. In case of renewal commission, the deduction available is 15\%. However, the maximum deduction allowed shall be limited to Rs 20,000.

Is commission paid before or after tax?

A commission is usually paid as a percentage of the sales value an employee generates. In a standard salaried job, tax deductions are the responsibility of the employer.

Can I show commission income in itr1?

Which ITR should I file? Ans- And If the commision income is more than salary income than ITR4 is required to be filed otherwise ITR-1 can be filed and commission income can be shown under other sources.

Is TDS applicable on commission?

The rate of TDS on commission or brokerage is ten percent, which includes five percent from the fiscal 2016-2017. There is no additional charge or education cess imposed on payment to resident. If PAN has not been delivered by the payee, then TDS to be deducted at the rate of 20 percent.

How do you account for commission income?

Under the cash basis of accounting, you should record a commission when it is paid, so there is a credit to the cash account and a debit to the commission expense account. If an employee is receiving a commission, then the company withholds income taxes on the amount of the commission paid to the employee.

Is commission an income or expense?

Most sales commissions are a selling expense, and so should be reported on the income statement as part of operating expenses. Often, they will appear under the selling, general, and administrative expenses (SG&A) category.

What is the income tax code for a commission agent?

Actually Commission Agents are Businessman according to Income Tax Act. So, ‘Income from Commission’ it falls under ‘Income from Business’ in the computation of tax. So, the code: ‘09005 – General commission agents,commodity brokers and auctioneers’ is a code of business.

Is commission income from a company taxable?

Commission income – Income Tax Forum If a individual person receives commission income from a company then this income is taxable in hands of person under which head of income – Income Tax If a individual person receives commission income from a company then this income is taxable in hands of person under which head of income – Income Tax

What is the treatment of commission received as income from other sources?

It will be treated as Income from Other Sources if the commission received is not chargeable to tax under the other heads of income viz. “Salary”, “House property”, “Business or Profession” and “Capital Gains”.

What is Commission or brokerage under Income Tax Act 1961?

Explanation (i) to Section 194H of the Income Tax Act, 1961 contains the meaning of the term ‘Commission or Brokerage’. As per the said Explanation, Commission or Brokerage includes any payment received / receivable (directly or indirectly) by a person acting on behalf of another person for –

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