Quick Summary of TDS Code 1006

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Old Section vs New TDS Code

👉 Users searching for:

• “new code for 194H”
• “commission TDS code”
• “brokerage TDS code”

are generally referring to TDS Code 1006.

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What is TDS Code 1006?

TDS Code 1006 corresponds to:

Section 194H of the earlier Income Tax Act.

Under the new Income Tax Act code structure, TDS Code 1006 generally applies to:

• Commission payments
• Brokerage payments
• Agent commission
• Referral commission
• Sales commission

👉 In simple terms, businesses deduct TDS under Code 1006 when paying commission or brokerage exceeding prescribed threshold limits.

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TDS Rate for Code 1006

👉 The standard TDS rate under Code 1006 is generally 2%.

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Threshold Limit for TDS Code 1006

👉 TDS becomes applicable once aggregate commission or brokerage payments exceed ₹20,000 during the financial year.

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What Payments Are Covered Under 1006?

TDS Rate Code 1006 generally applies to:

• Sales commission
• Brokerage payments
• Referral commission
• Dealer commission
• Agent incentives linked to sales
• Commission on business procurement

👉 The payment must generally be in the nature of commission or brokerage.

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Common Examples of TDS Code 1006

TDS Rate Code 1006 commonly applies in situations such as:

• Real estate brokerage payments
• Sales agent commission
• Marketing referral commission
• Dealer incentive payouts
• Commission to business development agents

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Practical Example of TDS Code 1006

Example – Sales Commission

A company pays:

• Sales commission to an agent: ₹1,50,000 during the year

Since the payment exceeds ₹20,000:

• TDS under Code 1006 becomes applicable.

Applicable deduction:

• TDS Rate: 2%
• TDS Amount: ₹3,000

Net payment:

• ₹1,47,000

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Difference Between Commission and Professional Fees

Businesses often get confused between:

• Commission payments
  and
• Professional service fees

👉 Correct classification is important because incorrect TDS deduction can create notices and reconciliation issues.

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Who Is Required to Deduct TDS Under 1006?

Generally, TDS under Code 1006 is deducted by:

• Companies
• LLPs
• Firms
• Businesses making commission or brokerage payments

👉 Applicability depends on turnover limits and TDS provisions under the Income Tax Act.

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Common Mistakes Businesses Make

Businesses often make mistakes such as:

• Ignoring aggregate yearly threshold calculations
• Incorrectly classifying professional fees as commission
• Non-deduction after threshold crossing
• Incorrect PAN reporting
• Late TDS deposit and return filing

👉 Incorrect compliance may result in notices, interest, penalties, and vendor disputes.

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TDS Return Reporting for Code 1006

TDS deducted under Code 1006 must be properly reported in the applicable TDS return.

Businesses should ensure:

• Correct TDS code selection
• Proper PAN reporting
• Accurate payment classification
• Timely TDS return filing

👉 Incorrect reporting can create reconciliation issues in AIS and Form 26AS.

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Frequently Asked Questions

What is TDS Code 1006?
TDS Code 1006 generally applies to commission and brokerage payments under the earlier Section 194H structure.

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What is the TDS rate under 1006?
The standard TDS rate is generally 2%.

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What is the threshold limit for TDS Code 1006?
TDS generally becomes applicable once aggregate payments exceed ₹20,000 during the financial year.

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What is the new code for Section 194H?
The new TDS code commonly associated with Section 194H is TDS Code 1006.

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Does TDS apply on brokerage payments?
Yes, brokerage payments generally fall under TDS Code 1006 if threshold limits are crossed.

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Final Thoughts

TDS Rate Code 1006 is an important category under the new Income Tax Act structure because it applies to:

• Commission Payments
• Brokerage Payments
• Agent Incentives
• Referral Commission

👉 Businesses should carefully monitor yearly commission payouts to ensure proper TDS compliance once threshold limits are crossed.

Correct classification, deduction, and reporting are critical to avoid notices and reconciliation issues.

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Need Help With TDS Compliance?

If you need assistance with:

• Commission TDS applicability
• Correct TDS deduction
• TDS return filing
• Payment classification compliance

our team can help simplify your TDS compliance process.