That deduction is called TDS: Tax Deducted at Source.

Under Section 194H of the Income Tax Act, any bank, NBFC, or financial institution that pays you commission exceeding ₹20,000 in a financial year must deduct TDS at 2% before releasing your earnings. This guide explains exactly how it works, what rate applies in FY 2025-26, how to verify what has been deducted, and how to file your income tax return correctly.

This guide explains exactly how TDS on DSA commission works, what rate applies in 2026, how to check what’s been deducted, and how to file your income tax return correctly. 

What Is TDS on DSA Commission?

TDS on DSA commission is the tax that a bank or NBFC deducts from your commission before sending you the payout.

Think of it this way. You source a home loan worth ₹50 lakh for a bank. The bank agrees to pay you a 0.4% commission — that is ₹20,000. But instead of paying ₹20,000 directly, the bank deducts 2% as TDS (₹400) and pays you ₹19,600. The ₹400 goes to the government on your behalf.

This is TDS on DSA commission. It is not an extra tax. It is an advance payment of income tax credited in your name.

The key point: TDS is not your final tax liability. It is only a prepayment. When you file your Income Tax Return, you reconcile your actual tax with the TDS already deducted. If too much was deducted, you get a refund. If too little, you pay the balance.

Understanding Section 194H of the Income Tax Act

Section 194H is the specific provision under the Income Tax Act, 1961 that governs TDS on commission and brokerage income.

Section 194H of the Income Tax Act is specifically dedicated to TDS deducted on income earned through brokerage or commission paid to an Indian resident. The liability for TDS arises either at the time of crediting the amount in the books or at the time of making the actual payment, whichever is earlier. 

What Section 194H covers:

• Commission paid to loan DSAs, referral agents, and channel partners
• Brokerage paid to intermediaries for buying or selling goods and assets
• Commission paid by banks and NBFCs to their distribution partners
• Referral fees paid by financial institutions to sub-DSAs and master DSAs

What Section 194H does NOT cover:

• Insurance commission — that falls under Section 194D
• Salary paid to employees, even if called “sales commission” — that falls under Section 192
• Brokerage on transactions on a recognised stock exchange
• Payments to non-resident individuals or entities

Latest Updates: Section 194H and Commission Taxation in 2025-26

Is DSA Commission Taxable?

Yes, absolutely. DSA commission income is taxable under Indian income tax law regardless of whether TDS has been deducted or not. TDS is a mechanism for advance tax collection — it does not determine whether your income is taxable.

The fact that your commission is below the ₹20,000 TDS threshold does not mean it is tax-free. It simply means the payer is not required to deduct TDS. You must still include every rupee of commission income in your ITR.

Who Deducts TDS on DSA Commission?

The entity paying the commission is responsible for deducting and depositing TDS. In the DSA ecosystem, that means:

• Public sector banks (SBI, Bank of Baroda, Punjab National Bank, etc.)
• Private sector banks (HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, etc.)
• NBFCs (Bajaj Finance, Tata Capital, Aditya Birla Finance, Hero FinCorp, etc.)
• Housing Finance Companies (LIC Housing Finance, PNB Housing Finance, etc.)
• DSA aggregators and financial distribution companies that pay sub-DSAs

Important: When the individual or HUF’s business turnover does not exceed ₹1 crore (or professional fees ₹50 lakh) in the preceding year, the individual or HUF is not required to deduct TDS, even when the payment crosses the threshold limit. This means small individual operators paying referral fees to other DSAs may be exempt from deducting TDS, but large banks and NBFCs are always required to deduct.

Also Read: What Does a DSA Do in a Bank? 8 Roles, Duties & Income (2026) 

Current TDS Rate on DSA Commission in 2026

The TDS rate on DSA commission in 2026 is 2% (where PAN is furnished). If you have not submitted your PAN to the paying bank or NBFC, TDS is deducted at 20%.

Effective October 1, 2024, the TDS rate on commission or brokerage was reduced from 5% to 2%. This rate continues unchanged in Tax Year 2026-27 under the new Income Tax Act, 2025.

Here is a clean summary of the applicable TDS rates under Section 194H for FY 2025-26 (AY 2026-27):

The single most important action you can take as a DSA: always submit your PAN to every bank and NBFC you work with. The difference between 2% and 20% TDS on a ₹5 lakh commission payout is ₹10,000 vs ₹1,00,000. That gap is enormous. 

Threshold Limit for TDS Deduction Under Section 194H

For FY 2025-26, the threshold for TDS deduction under Section 194H has been increased from ₹15,000 to ₹20,000. This means TDS will only be deducted if the total commission or brokerage payments to a single DSA exceed ₹20,000 in a financial year. TaxBuddy

Key points about the threshold:

• The ₹20,000 limit applies per payer, per financial year
• If you earn ₹18,000 from HDFC Bank and ₹18,000 from ICICI Bank, neither deducts TDS (each is below the limit individually)
• If you earn ₹25,000 from a single NBFC in the year, TDS applies on the full ₹25,000 — not just the amount above ₹20,000
• TDS is triggered either when the payment is made OR when the commission is credited in the books, whichever comes first

How Banks and NBFCs Deduct TDS on DSA Commission

The deduction happens at the earlier of two events: when the commission amount is credited to your account or when it is actually paid to you. Banks and NBFCs do not wait until year-end — TDS is typically deducted at the time of each payout. 

1. Commission is calculated based on loan disbursals you sourced
2. Your PAN is verified in the payer’s system
3. TDS is computed at 2% of the gross commission amount
4. Net commission (gross minus TDS) is transferred to your bank account
5. TDS amount is deposited to the government by the 7th of the following month (or April 30 for March deductions)
6. TDS return is filed quarterly by the payer
7. Form 16A (TDS certificate) is issued to you within 15 days of return filing

As a DSA, you receive Form 16A from each lender who has deducted TDS. This certificate is proof that tax has been deducted and deposited on your behalf.

Also Read: Documents Required for DSA Registration with Banks & NBFCs 

TDS Calculation with Examples

Example 1 – Home Loan DSA (Single Lender)

Rajesh is a home loan DSA in Pune working with one bank throughout the year.

TDS = 2% × ₹3,00,000 = ₹6,000 Net payout received = ₹2,94,000

The ₹6,000 TDS is credited against Rajesh’s final income tax liability for the year.

Example 2 – Corporate DSA (Ruloans Partner)

Meena is a Ruloans DSA partner who sources personal, business, and home loans across multiple lenders.

Total TDS of ₹3,700 will reflect across all entries in Meena’s Form 26AS and AIS.

Example 3 – New DSA Without PAN Submitted

Amit is a new DSA who forgot to submit his PAN to the NBFC.

Difference = ₹7,200 lost to higher TDS — just because of a missing PAN.

Amit can recover this via ITR, but it means waiting months for a refund. Submit PAN on day one of any new lender partnership.

Example 4 – TDS on Commission + GST Invoice

Priya is GST-registered and raises invoices to her NBFC partner.

Key point: TDS is always computed on the commission amount only, not on GST. This is a commonly misunderstood calculation.

How DSA Commission Is Classified Under Income Tax

DSA commission income is classified as business income under the head “Profits and Gains of Business or Profession” (PGBP) — not salary and not other income.

This matters because it determines which ITR form you file and what deductions you can claim.

Which ITR Form Should a Loan DSA File?

Most individual working DSAs file ITR-3 or ITR-4. Filing ITR-1 for commission income is incorrect and can result in a defective return notice from the Income Tax Department.

Also Read: Corporate DSA vs Individual Agent: Tax Benefits & Payout Tiers in 2026 

Expenses a DSA Can Claim Against Commission Income

One of the biggest financial advantages of being classified as a business income earner is the ability to deduct legitimate business expenses before computing your tax.

Deductible Expenses for Loan DSAs

How Deductions Reduce Your Tax

The tax saving is real, legal, and available to every DSA who maintains records. The only requirement is that expenses must be genuinely incurred for business purposes and documented with receipts.

How to Check TDS Deducted on Your Commission Income

You can verify whether TDS has been correctly deducted and deposited through three official government portals:

1. Form 26AS

Form 26AS is your consolidated tax statement. It shows all TDS deducted against your PAN by all deductors (banks, NBFCs, etc.) during the financial year.

How to access:

• Go to incometax.gov.in
• Log in with your PAN and password
• Navigate to “My Account” → “View Form 26AS”
• Or directly via the TRACES portal at tdscpc.gov.in

2. AIS (Annual Information Statement)

The AIS is a more comprehensive statement that includes TDS data, interest income, dividend income, property transactions, securities transactions, and more.

How to access:

• Log in to the Income Tax portal
• Go to “Services” → “AIS”
• Download the AIS PDF or view online

The AIS is now more detailed than Form 26AS and is the preferred document for verifying commission income reported by lenders.

3. TRACES Portal

TRACES (TDS Reconciliation Analysis and Correction Enabling System) lets you download your Form 16A directly from the portal if your deductor has filed their TDS return correctly.

What to verify:

• Is TDS reflected against each lender?
• Does the deducted amount match your commission payout statements?
• Has the TDS been deposited on time?

If you find discrepancies, raise a correction request with the deductor first. If unresolved, you can file a grievance on the Income Tax portal.

How to File ITR on DSA Commission Income 

Step-by-Step ITR Filing Guide for DSAs 

Step 1 – Collect commission payout statements and invoices from every lender you worked with during the year.

Step 2 – Download Form 26AS from the Income Tax portal to verify TDS deducted against your PAN.

Step 3 –  Download your AIS (Annual Information Statement) from the same portal and cross-check it with your own records.

Step 4 – Collect Form 16A from each bank and NBFC that deducted TDS.

Step 5 – Compile all business expense invoices and receipts.

Step 6 – Calculate total commission income and net taxable income (after expenses).

Step 7 – Pay any balance as self-assessment tax before filing (if your tax liability exceeds TDS already paid).

Step 8 – File ITR-3 or ITR-4 on the Income Tax e-filing portal at incometax.gov.in.

Step 9 – E-verify your return using Aadhaar OTP or net banking within 30 days of filing.

Can You Claim a TDS Refund?

Yes, and many DSAs are entitled to refunds but never claim them because they do not file ITR.

When You Are Entitled to a Refund

• Your total income (after expenses and deductions) falls in the nil tax slab, but TDS was still deducted
• TDS was deducted at 20% (PAN not submitted) and your actual tax rate is much lower
• You have significant Chapter VI-A deductions under the old tax regime that reduce your final tax liability

How to Claim It

File your ITR correctly with all TDS details. The portal will automatically compute the refund amount. Refunds are typically processed within 3 to 4 weeks of ITR processing and credited directly to your pre-validated bank account.

Refund Example

This refund is yours. You only receive it if you file your ITR.

GST on DSA Commission Income

GST and TDS are two separate obligations that can both apply to the same commission income.

GST Registration Threshold

If your total commission income from all lenders combined exceeds ₹20 lakh in a financial year (₹10 lakh for special category states), GST registration is mandatory.

Once GST Registered

• Charge 18% GST on your commission invoice raised to each bank or NBFC
• The lender pays you commission plus GST
• You collect and deposit GST with the government
• File GSTR-1 and GSTR-3B monthly or quarterly

How TDS and GST Work Together

TDS is always deducted only on the commission base amount, not on the GST component. This is a critical calculation point many DSAs get wrong.

Input Tax Credit (ITC) Benefit

Once GST registered, you can claim ITC on GST paid for business expenses — CRM software, office rent, professional services, and marketing. This reduces your net GST liability.

Common Tax Mistakes Made by Loan DSAs

Avoiding these mistakes saves money and keeps you clear of notices.

• Not filing ITR because income seems “low” Even if your income is below the taxable threshold, filing ITR is the only way to claim your TDS refund. That money is sitting with the government waiting for you to claim it.
• Using the wrong ITR form ITR-1 is incorrect for commission income. It must be reported as business income in ITR-3 or ITR-4. An incorrect form leads to a defective return notice.
• Not submitting PAN to lenders Triggering 20% TDS when the rate should be 2% is entirely avoidable. Submit PAN to every lender at the time of DSA registration.
• Not claiming business expenses Many DSAs pay income tax on their full gross commission when legitimate expenses could have reduced taxable income significantly.
• Declaring income lower than Form 26AS If the commission income in your ITR is lower than what lenders have reported in Form 26AS, an automated notice is generated. Always reconcile before filing.
• Ignoring GST obligations Crossing ₹20 lakh without GST registration and return filing attracts penalties and late fees.
• Claiming personal expenses as business expenses Family travel, personal mobile bills, or domestic costs claimed as business deductions are a red flag during scrutiny.
• Not maintaining documentation Verbal commission agreements do not hold during tax filing or assessment. Always maintain written commission statements, payout reports, and bank records.

Also Read: Understanding DSA Commission Tiers: How Payouts Grow with Performance 

Tax Planning Tips for Loan DSAs and Financial Advisors

Being tax-smart is not about avoiding taxes — it is about legally reducing what you owe.

1. Choose the right tax regime: 

Compare your liability under the old regime (with deductions like 80C, HRA, 80D) versus the new regime (lower slab rates, fewer deductions) before filing. For DSAs with significant business expenses, the old regime often works better.

2. Maintain a dedicated business bank account: 

Route all commission credits to one account. This makes income tracking, expense documentation, and tax filing cleaner and simpler.

3. Keep all business expense receipts: 

Travel, mobile bills, CRM subscriptions, office rent, professional fees — document everything. These reduce your net taxable income from the DSA business.

4. Pay advance tax if TDS does not cover your liability:

If your total tax liability is likely to exceed ₹10,000, pay advance tax in quarterly instalments (June 15, September 15, December 15, March 15). This avoids interest under Sections 234B and 234C.

5. Register for GST if close to ₹20 lakh threshold: 

Once you approach ₹20 lakh in annual commission, plan your GST registration in advance rather than scrambling after the threshold is crossed.

6. Apply for a lower TDS certificate under Section 197 if eligible: 

If your estimated tax liability for the year is significantly lower than what TDS deductions would amount to, you can apply to the Income Tax Officer for a certificate under Section 197 directing the deductor to deduct TDS at a lower rate or nil. This improves your monthly cash flow.

7. Use a CA who understands DSA business income:

Commission income, clawback adjustments, TDS reconciliation across multiple lenders, and GST compliance are all specific to the financial distribution business. A CA with experience in this space will save you more than their fees.

Documents Required for Tax Filing

Keep these documents organised before you begin your ITR:

Compliance Checklist for Loan DSAs

Use this checklist at the start of every financial year and before filing your ITR:

Ongoing (Throughout the Year):

• PAN submitted to every lender you work with
• Collecting commission payout statements from each lender
• Reconciling each payout with TDS deducted
• Paying advance tax on June 15, September 15, December 15, March 15
• Maintaining receipts for all business expenses
• Monitoring total commission to track GST registration threshold

At Year-End (March–July):

• Collecting Form 16A from all deductors
• Downloading updated Form 26AS and AIS
• Reconciling TDS credit across all lenders
• Computing total taxable income
• Filing ITR (deadline: July 31 for non-audit cases)
• Filing GST returns if registered
• Verifying refund status if excess TDS was deducted

How Ruloans Supports DSA Partners With Commission Transparency

Tax compliance starts with having clean, accurate records of what you earned and when. That is where your choice of distribution platform matters.

Ruloans is India’s leading financial distribution company, working with 275+ banks and NBFCs across 4,000+ cities. For DSA partners, this multi-lender access comes with structured payout systems that make tax documentation significantly cleaner.

• Transparent commission tracking. Every payout through Ruloans is documented with clear disbursement details — loan amount, commission rate, payout date, and lender name. This is exactly the data you need to reconcile with Form 26AS at year-end.
• Multi-lender, single DSA code. Working with 275+ lenders through one DSA code means fewer accounts to track, fewer Form 16A documents to chase, and a cleaner income picture overall.
• Ruconnect App — real-time payout visibility. India’s first B2B DSA app shows real-time disbursement status, payout history, and commission details in one place. This digital trail simplifies income verification and expense documentation.
• Fast onboarding with PAN verification. 24-hour partner onboarding at Ruloans ensures your PAN is registered correctly with every lender from day one — so TDS is always deducted at 2%, never at the punitive 20% no-PAN rate.
• 100% on-time payouts. Predictable, on-schedule commission payments make advance tax planning straightforward. No surprises, no cash flow gaps.
• Product training across all loan categories. Home loans, personal loans, business loans, LAP, credit cards, and insurance — trained DSAs close more loans, earn more commission, and build a stronger case for business deduction claims.

Tax compliance is not a burden when your income records are clean. Ruloans is built to give DSA partners exactly that.

Also Read: How to Apply for Loan DSA Registration Online 

Conclusion

TDS on DSA commission is not something to fear. It is something every loan agent needs to understand well — because understanding it properly is the difference between paying too much tax and keeping exactly what you are entitled to. 

The opportunity in loan distribution is significant and growing. DSAs who build volume across multiple lenders, maintain clean records, and handle their tax obligations correctly are building businesses with real compounding upside.

Ruloans supports that journey — giving DSA partners access to 275+ banks and NBFCs, transparent commission tracking, real-time payout visibility through the Ruconnect App, and the operational infrastructure that makes running a compliant loan distribution business straightforward.

Understand your TDS. File your returns. Claim what is yours. And build a DSA business that grows every single year.

FAQ

Ruloans Team

Every article on Ruloans is researched, written, and verified by a team of former bankers, certified financial planners, DSA industry veterans, and lending compliance specialists with over 25 years of hands-on experience in India’s loan distribution landscape. From decoding home loan eligibility and EMI planning for borrowers, to guiding DSA partners on commissions, registrations, and building a lending business — our content is grounded in real industry expertise, fact-checked against live RBI guidelines and current bank and NBFC policies, and built to help you make confident financial decisions.

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