Tax deduction on commission requires payer firms to deduct tax at source on commission payments to residents.

Payers other than individuals or HUFs must, at the earlier of credit or payment to a resident payee, deduct income-tax at source at the prescribed rate on commission or brokerage; no deduction is required where the aggregate amount credited or paid in the financial year does not exceed the specified exemption threshold. "Commission or brokerage" includes payments for services rendered (not being professional services) and for services in buying or selling goods or transactions in assets, excluding securities. Crediting to any account, including a suspense account, is deemed credit to the payee.

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