{"id":30993,"date":"2026-01-19T00:51:12","date_gmt":"2026-01-18T19:21:12","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=30993"},"modified":"2026-01-19T00:52:01","modified_gmt":"2026-01-18T19:22:01","slug":"commission-booking-in-family-member-low-income-pan-holder","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/","title":{"rendered":"Commission Booking in family member\/low-income PAN holder"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d848ac89600\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d848ac89600\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#Booking_%E2%80%9Csales_commission%E2%80%9D_in_names_of_family_members_or_low-income_PAN_holders\" title=\"Booking \u201csales commission\u201d in names of family members or low-income PAN holders\">Booking \u201csales commission\u201d in names of family members or low-income PAN holders<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#Applicability_of_Section_194H\" title=\"Applicability of Section 194H\">Applicability of Section 194H<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#Rate_of_TDS_under_Section_194H\" title=\"Rate of TDS under Section 194H\">Rate of TDS under Section 194H<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#Meaning_of_%E2%80%9CCommission_or_Brokerage%E2%80%9D\" title=\"Meaning of \u201cCommission or Brokerage\u201d\">Meaning of \u201cCommission or Brokerage\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#When_TDS_under_Section_194H_is_NOT_Applicable\" title=\"When TDS under Section 194H is NOT Applicable\">When TDS under Section 194H is NOT Applicable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#TDS_Deposit_Return_Due_Dates_FY_2025-26\" title=\"TDS Deposit &amp; Return Due Dates (FY 2025-26)\">TDS Deposit &amp; Return Due Dates (FY 2025-26)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#Important_Practical_Points_related_to_TDS_under_Section_194H\" title=\"Important Practical Points related to\u00a0TDS under Section 194H\">Important Practical Points related to\u00a0TDS under Section 194H<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#Sales_commission_Booking_in_family_members_name_or_low-income_PAN_holders\" title=\"Sales commission Booking in family members name or low-income PAN holders\">Sales commission Booking in family members name or low-income PAN holders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#%E2%80%9CInvoice_PAN_TDS_Safe_Tax_Planning%E2%80%9D\" title=\"\u201cInvoice + PAN + TDS = Safe Tax Planning?\u201d\">\u201cInvoice + PAN + TDS = Safe Tax Planning?\u201d<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#What_professionals_must_clearly_understand\" title=\"What professionals must clearly understand\">What professionals must clearly understand<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#What_authorities_actually_examine_today\" title=\"What authorities actually examine today\">What authorities actually examine today<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#What_typically_follows_ground-level_assessment_reality\" title=\"What typically follows (ground-level assessment reality)\">What typically follows (ground-level assessment reality)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/carajput.com\/blog\/commission-booking-in-family-member-low-income-pan-holder\/#What_courts_have_said_consistently_for_decades\" title=\"What courts have said consistently, for decades\">What courts have said consistently, for decades<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-30994\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/sales-comission-trap.jpeg\" alt=\"Sales commission Booking in family members or low-income PAN holders\" width=\"861\" height=\"1541\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/sales-comission-trap.jpeg 800w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/sales-comission-trap-168x300.jpeg 168w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/sales-comission-trap-572x1024.jpeg 572w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2026\/01\/sales-comission-trap-768x1375.jpeg 768w\" sizes=\"(max-width: 861px) 100vw, 861px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Booking_%E2%80%9Csales_commission%E2%80%9D_in_names_of_family_members_or_low-income_PAN_holders\"><\/span><span style=\"color: #000080;\"><strong>Booking \u201csales commission\u201d in names of family members or low-income PAN holders<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Applicability_of_Section_194H\"><\/span><span style=\"color: #000080;\"><strong>Applicability of Section 194H<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Section 194H of the Income Tax Act, 1961, governs Tax Deducted at Source on payments made by way of commission or brokerage (other than insurance commission). From 1 April 2025, TDS under this section is required to be deducted at 2%, subject to a threshold of INR 20,000 in a FY.<\/li>\n<li>TDS under Section 194H applies when payment is made to a resident and the nature of the payment is commission or brokerage. &amp; Aggregate payment exceeds INR 20,000 in a financial year. Payer is Any person (including individual\/HUF), provided Business turnover exceeds \u20b91 crore, or Professional receipts exceed INR 50 lakh in the preceding FY.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Rate_of_TDS_under_Section_194H\"><\/span><span style=\"color: #000080;\"><strong>Rate of TDS under Section 194H<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table style=\"height: 311px;\" width=\"808\">\n<thead>\n<tr>\n<td>Particulars<\/td>\n<td>Rate<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Normal TDS rate<\/td>\n<td>2%<\/td>\n<\/tr>\n<tr>\n<td>If PAN not furnished<\/td>\n<td>20%<\/td>\n<\/tr>\n<tr>\n<td>Surcharge \/ Cess<\/td>\n<td>Not applicable<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong><span style=\"color: #000080;\">Time of Deduction of TDS:<\/span> <\/strong>TDS under Section 194H must be deducted at the earlier of credit of commission to the payee\u2019s account or actual payment (by cash, cheque, adjustment, or otherwise). Even if commission is retained or netted off, TDS obligation still arises.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Meaning_of_%E2%80%9CCommission_or_Brokerage%E2%80%9D\"><\/span><span style=\"color: #000080;\"><strong>Meaning of \u201cCommission or Brokerage\u201d<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As per the explanation (i) to Section 194H, commission or brokerage includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person:<\/p>\n<ul>\n<li>For services rendered (excluding professional services)<\/li>\n<li>During the course of buying or selling of goods<\/li>\n<li>In relation to transactions involving Assets or Valuable articles or things<br \/>\n<em>(excluding securities)<\/em><\/li>\n<li>Common Examples Sales commission, Real estate brokerage, distribution commission, and referral or incentive commission<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"When_TDS_under_Section_194H_is_NOT_Applicable\"><\/span><span style=\"color: #000080;\"><strong>When TDS under Section 194H is NOT Applicable<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>Section 194H does not apply in the following cases:<\/strong><\/span><\/p>\n<ul>\n<li>Aggregate commission \u2264 INR 20,000 in the FY<\/li>\n<li>Insurance commission (covered under Section 194D)<\/li>\n<li>Professional services (covered under Section 194J)<\/li>\n<li>Brokerage on securities transactions<\/li>\n<li>Commission paid to employees (covered under Section 192)<\/li>\n<li>Payments by BSNL \/ MTNL to PCO franchisees<\/li>\n<li>In case Payments by TV channels\/newspapers to advertising agencies<\/li>\n<li>Turnover commission paid by RBI to Agency Banks\\<\/li>\n<li>Mobile service providers to distributors (as per Supreme Court ruling)<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Lower or NIL Deduction \u2013 Section 197<\/strong><\/span><\/p>\n<ul>\n<li>The deductee may apply to the Assessing Officer for lower or NIL TDS under Section 197. Compliance checks for deductor PAN validation, Certificate validity (Section, Rate &amp; FY), Threshold monitoring &amp; Correct certificate number reporting in Form 26Q<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"TDS_Deposit_Return_Due_Dates_FY_2025-26\"><\/span><span style=\"color: #000080;\"><strong>TDS Deposit &amp; Return Due Dates (FY 2025-26)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>TDS Deposit Due Dates<\/strong><\/span><\/p>\n<table style=\"height: 232px;\" width=\"804\">\n<thead>\n<tr>\n<td>Month of Deduction<\/td>\n<td>Due Date<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>April \u2013 Feb<\/td>\n<td>7th of next month<\/td>\n<\/tr>\n<tr>\n<td>March<\/td>\n<td>30th April<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"color: #000080;\"><strong>TDS Return \u2013 Form 26Q<\/strong><\/span><\/p>\n<table style=\"height: 366px;\" width=\"864\">\n<thead>\n<tr>\n<td>Quarter<\/td>\n<td>Due Date<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Apr \u2013 Jun<\/td>\n<td>31 July 2025<\/td>\n<\/tr>\n<tr>\n<td>Jul \u2013 Sep<\/td>\n<td>31 October 2025<\/td>\n<\/tr>\n<tr>\n<td>Oct \u2013 Dec<\/td>\n<td>31 January 2026<\/td>\n<\/tr>\n<tr>\n<td>Jan \u2013 Mar<\/td>\n<td>31 May 2026<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3><span class=\"ez-toc-section\" id=\"Important_Practical_Points_related_to_TDS_under_Section_194H\"><\/span><span style=\"color: #000080;\"><strong>Important Practical Points related to\u00a0<\/strong><\/span><span style=\"color: #000080;\"><strong>TDS under Section 194H<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>TDS applies even if commission is adjusted against receivables<\/li>\n<li>Splitting payments to stay below INR 20,000 may attract scrutiny<\/li>\n<li>Family commission arrangements face substance-over-form tests<\/li>\n<li>GST registration may be mandatory even if income-tax exemption applies<\/li>\n<li>Section 194H applicable on airline ticket discounts to travel agents : TDS depends on whether it is a commission or a trade discount; substance matters.<\/li>\n<li>TDS applicable on trade incentives to dealers : If the incentive is linked to services rendered \u2192 Yes; if pure trade discount \u2192 No.<\/li>\n<li>The TDS applicable on RBI turnover commission to banks : \u2192 No, specifically excluded.<\/li>\n<li>Income tax TDS required to be deducted: \u2192 At the earlier of credit or payment.<\/li>\n<li>Expenses are deducted from commission income before TDS: No. TDS is on gross commission, not net income.<\/li>\n<\/ul>\n<p>GST Impact on Commission Payments: If commission is subject to GST, TDS is deducted on the value excluding GST; then GST liability and TDS compliance are independent, and non-GST registration does not override Section 194H applicability<\/p>\n<p><span style=\"color: #000080;\"><strong>Consequences of Non-Compliance<\/strong><\/span><\/p>\n<ul>\n<li>Disallowance of commission expense (u\/s 40(a)(ia))<\/li>\n<li>Interest u\/s 201(1A)<\/li>\n<li>Penalty exposure<\/li>\n<li>GST backdated registration risk (where applicable)<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Sales_commission_Booking_in_family_members_name_or_low-income_PAN_holders\"><\/span><span style=\"color: #000080;\">Sales commission Booking in family members name or low-income PAN holders<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"%E2%80%9CInvoice_PAN_TDS_Safe_Tax_Planning%E2%80%9D\"><\/span><span style=\"color: #000080;\"><strong>\u201cInvoice + PAN + TDS = Safe Tax Planning?\u201d<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>One of the costliest misconceptions in Indian taxation today. In many businesses, especially MSMEs, a familiar practice still survives: Booking \u201csales commission\u201d in the names of family members or low-income PAN holders, supported by invoices and TDS, to reduce profits and stay below GST thresholds. On paper, it looks compliant. On tax analytics dashboards, it flashes RISK<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_professionals_must_clearly_understand\"><\/span><span style=\"color: #000080;\"><strong>What professionals must clearly understand<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>TDS deduction does NOT establish genuineness<\/li>\n<li>Invoices prove form, not substance<\/li>\n<li>Commission without capability = disallowance<\/li>\n<li>Family PANs invite \u201chuman probability\u201d &amp; related-party tests<\/li>\n<li>GST law ignores Income-tax exemption limits<\/li>\n<li>Agents acting on behalf of others require GST registration irrespective of turnover<\/li>\n<li>AI now auto-detects clustered commissions, common addresses, bank patterns &amp; family linkages<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_authorities_actually_examine_today\"><\/span><span style=\"color: #000080;\"><strong>What authorities actually examine today<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Who actually generated the sales?<\/li>\n<li>What commercial capability did the recipient possess?<\/li>\n<li>Why are amounts consistently just below threshold limits?<\/li>\n<li>If Why no GSTIN despite regular commission income?<\/li>\n<li>Why identical narration, timing &amp; values across family PANs?<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_typically_follows_ground-level_assessment_reality\"><\/span><span style=\"color: #000080;\"><strong>What typically follows (ground-level assessment reality)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Income-tax: Commission disallowed u\/s 37<br \/>\n\u2022 GST: Backdated registration + 18% tax demand<br \/>\n\u2022 Interest: Mandatory &amp; non-negotiable<br \/>\n\u2022 Penalty: Substantial<br \/>\n\u2022 Individuals: Personal tax exposure<br \/>\n\u2022 Company: Allegation of facilitation \/ colourable device<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_courts_have_said_consistently_for_decades\"><\/span><span style=\"color: #000080;\"><strong>What courts have said consistently, for decades<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Substance over form<\/li>\n<li>Colourable devices \u2260 tax planning<\/li>\n<li>Family transactions need commercial justification, not paperwork theatrics<\/li>\n<li>Documentation supports reality; it does not create it.<\/li>\n<\/ul>\n<p>Why this structure is dying fast : Earlier days, manual scrutiny, limited cross-verification, and now AIS + 26AS + GST returns + bank data + address mapping + PAN-family analytics.<\/p>\n<p><strong><span style=\"color: #000080;\">What once looked <em>\u201csmart\u201d<\/em> now looks reckless.<\/span><\/strong><\/p>\n<ul>\n<li>If commission is real: Prove capability, effort, linkage to sales, arm\u2019s-length pricing &amp; GST compliance.<\/li>\n<li>In case it\u2019s only tax-driven: The risk today far outweighs any temporary saving.<\/li>\n<li>Invoice + PAN + TDS does not guarantee allowability. Tax authorities now evaluate commercial substance, capability, GST linkage, and data analytics footprints.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Booking \u201csales commission\u201d in names of family members or low-income PAN holders Applicability of Section 194H Section 194H of the Income Tax Act, 1961, governs Tax Deducted at Source on payments made by way of commission or brokerage (other than insurance commission). From 1 April 2025, TDS under this section is required to be deducted &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[10409],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/30993"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=30993"}],"version-history":[{"count":2,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/30993\/revisions"}],"predecessor-version":[{"id":30996,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/30993\/revisions\/30996"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=30993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=30993"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=30993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}