The 60-second version
Section 196H requires 5% TDS on brokerage or commission paid to non-residents — applies when Indian payer remits trading, shipping, or agency commission abroad.
196H is NR brokerage — 194H is resident commission at 5%
Section 196H applies when an Indian payer remits brokerage or commission to a non-resident — 5% TDS unless DTAA provides lower rate.
Common after return: Indian trading firm paying commission to foreign broker, shipping agent, or insurance broker abroad.
Resident lane: Section 194H guide for resident commission at 5% above threshold.
Commission TDS matrix
| Section | Rate | Payee |
|---|---|---|
| 196H | 5% | NR brokerage / commission |
| 194H | 5% | Resident commission > ₹15K |
| 194J | 10% | Professional fees |
| 195A | DTAA or 20% | Other NR sums |
196H sequence
Classify payment
Brokerage vs professional fee.
Deduct 5%
Payer withholds at source.
Form 16A
TDS certificate to NR.
Form 26AS
Credit in payee ITR.
DTAA
Form 67 if reduced rate.
TDS loop
196H kit
- Contract copy.
- TDS challan.
- Form 16A.
- DTAA cert.
- Form 67 if credit.
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vs 194J
Technical or professional services to NR use 194J/195 — 196H is specifically brokerage or commission.
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vs 194H?
196H is NR payee; 194H is resident commission above ₹15,000 threshold.
vs 194J?
Professional/technical fees use 194J at 10% — 196H is brokerage-specific.
DTAA rate?
Article 12 royalties/commission may apply — verify treaty text.
GST?
Separate GST on brokerage services — TDS under 196H is income tax only.
Form 26AS miss?
See AIS mismatch troubleshooting guide.
RNOR?
Foreign commission income may be exempt in RNOR year if sourced abroad.
Your tax year is already running.
RNOR status, exit timing, and DTAA benefits all depend on decisions you make before you land. Don't guess.