Commission calculator with slabs and TDS
Sales agents, property brokers, insurance advisors, distributors, hospital referral partners and marketplace sellers are all paid commission. Working it out gets tricky when the structure is tiered (2% up to ₹1 lakh, 3% up to ₹5 lakh, 5% beyond) and when the payer must deduct TDS under Section 194H. This tool computes the gross commission, GST if the agent is registered, the TDS and the net amount payable — all in one go.
Commission structures supported
- Flat % — single rate on the whole amount
- Tiered (marginal) — like income-tax slabs, each portion of sales earns its own rate
- Tiered (whole amount) — once a slab is reached, the entire sales figure earns that slab's rate; common in dealer incentive schemes
- Optional fixed/base amount added on top
Worked example
Sales of ₹6,50,000 with marginal slabs 2% / 3% / 5%: first ₹1,00,000 × 2% = ₹2,000; next ₹4,00,000 × 3% = ₹12,000; remaining ₹1,50,000 × 5% = ₹7,500. Gross commission = ₹21,500 (3.31% effective). TDS u/s 194H @ 2% = ₹430. Net payable = ₹21,070. Under the "whole amount" method the agent would instead get 5% of ₹6,50,000 = ₹32,500 — a big difference, so check which method your agreement specifies.
TDS on commission — Section 194H
Any person (other than an individual/HUF not subject to tax audit) paying commission or brokerage must deduct TDS at 2% (reduced from 5% from 1 October 2024) once the aggregate paid to that payee in the financial year exceeds ₹20,000 (threshold raised from ₹15,000 from 1 April 2025). If the agent has no PAN, the rate is 20%. Insurance commission is covered separately by Section 194D. TDS must be deposited by the 7th of the next month and reported in Form 26Q.
GST on commission
Commission is a taxable service at 18%. If the agent's turnover exceeds ₹20 lakh (₹10 lakh in special-category states) they must register and charge GST on their invoice. The principal can claim this as input tax credit. TDS is calculated on the commission amount excluding GST when GST is shown separately (CBDT Circular 23/2017).
Who uses this
Businesses paying agents and preparing TDS returns; agents verifying their payout; HR teams designing incentive slabs; accountants booking commission expense with the correct TDS and GST entries.
Frequently Asked Questions
What is the TDS rate on commission in FY 2025-26?
2% under Section 194H (20% if PAN is not provided). The annual threshold is ₹20,000 per payee.
Is TDS deducted on the GST portion of commission?
No. When GST is shown separately on the invoice, TDS applies only to the commission amount excluding GST.
What is the difference between marginal and whole-amount slabs?
Marginal applies each rate only to the sales falling in that band. Whole-amount applies the highest achieved rate to the entire sales figure. Read your agreement to know which applies.
Does an individual paying brokerage to a property agent need to deduct TDS?
Only if the individual was liable to tax audit in the previous year. Salaried individuals and small proprietors below audit limits are exempt from deducting under 194H.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.