If you earn commission from airlines, hotels, OTA platforms, or consolidators, chances are TDS (Tax Deducted at Source) is being deducted before you receive your payment. Here's how TDS on commission works and what you need to do as a travel agent.
When is TDS deducted on your commission?
TDS is deducted by the person (or company) paying you commission. This means:
| Who pays you commission | Do they deduct TDS? |
|---|---|
| Airlines (on ticket booking commission) | Yes |
| Hotels (on room booking commission) | Yes |
| OTA platforms (on aggregated commissions) | Yes |
| DMCs (on referral fees) | Yes |
| Corporate clients (if they pay you commission directly) | Depends on their turnover |
| Individual clients | Generally no (individuals aren't required to deduct TDS unless their turnover exceeds specified limits) |
TDS rate on commission
Under Section 194H of the Income Tax Act:
| Scenario | TDS Rate |
|---|---|
| Commission/brokerage (normal) | 5% |
| If you don't provide PAN | 20% |
| Threshold (below which no TDS is deducted) | ₹15,000 per FY |
Key point: If total commission from a single payer exceeds ₹15,000 in a financial year, they must deduct TDS at 5% on the full amount (not just the amount above ₹15,000).
How it works in practice
Example: Hotel commission
You book 50 rooms over the year with Hotel ABC. Your total commission earned: ₹1,20,000.
- Hotel deducts TDS: 5% × ₹1,20,000 = ₹6,000
- You receive: ₹1,14,000
- The ₹6,000 is deposited with the government by the hotel
- You claim the ₹6,000 as tax already paid when filing your income tax return
Example: Airline commission (via consolidator)
Your consolidator pays you ₹2,40,000 commission over the year.
- Consolidator deducts TDS: 5% × ₹2,40,000 = ₹12,000
- You receive: ₹2,28,000
- You claim ₹12,000 credit in your ITR
TDS vs GST - understanding both
Commission you earn is subject to BOTH GST and TDS:
| Item | Amount |
|---|---|
| Your commission | ₹10,000 |
| + GST (18%) | ₹1,800 |
| Total invoice amount | ₹11,800 |
| TDS deducted (5% of ₹10,000) | ₹500 |
| You receive | ₹11,300 |
Important: TDS is calculated on the base commission amount (before GST). The GST component is paid to you in full.
When YOU must deduct TDS
If you pay commission to sub-agents, freelance tour leaders, or guides, you may need to deduct TDS:
| Condition | Do you deduct TDS? |
|---|---|
| You're an individual/HUF with turnover > ₹1 crore (business) | Yes |
| You're a company or partnership firm | Yes |
| You're an individual with turnover < ₹1 crore | No (unless covered by tax audit) |
| Payment to sub-agent exceeds ₹15,000/FY | Yes (if you're liable to deduct) |
Ensuring proper TDS credit
Step 1: Collect Form 16A
Every entity that deducts TDS from your commission must issue Form 16A (TDS certificate) within 15 days of filing their quarterly TDS return.
If they don't issue it voluntarily:
- Ask explicitly ("Please issue Form 16A for Q1/Q2/Q3/Q4")
- Follow up - you need this for your ITR
Step 2: Verify in Form 26AS / AIS
Check your Form 26AS (tax credit statement) and Annual Information Statement (AIS) on the income tax portal. All TDS deducted should reflect here.
If TDS doesn't appear:
- The deductor hasn't filed their TDS return
- They filed with wrong PAN (yours)
- They filed but against a different quarter
Follow up with the deductor to correct it - you can't claim credit for TDS that doesn't appear in your 26AS.
Step 3: Claim in ITR
When filing your income tax return:
- Report total commission income (gross, before TDS)
- Claim all TDS amounts as "tax already paid"
- If TDS exceeds your tax liability, you get a refund
Quarterly TDS deposit schedule
If you're deducting TDS on payments to sub-agents:
| Quarter | Period | Deposit deadline |
|---|---|---|
| Q1 | April–June | July 7 |
| Q2 | July–September | October 7 |
| Q3 | October–December | January 7 |
| Q4 | January–March | April 30 (for March: May 7) |
File Form 26Q (TDS return) quarterly:
- Q1: July 31
- Q2: October 31
- Q3: January 31
- Q4: May 31
Lower TDS certificate (Section 197)
If your total income is low enough that you won't owe tax (or will owe less than total TDS deducted), you can apply for a lower deduction certificate:
- Apply to your Assessing Officer on Form 13
- If approved, the certificate specifies a lower TDS rate (could be 0%, 1%, 2% - whatever is appropriate)
- Share this certificate with all your commission payers
- They deduct at the lower rate instead of 5%
When this helps: If you're a new agent with annual income below ₹5 lakh (after deductions), the standard 5% TDS on all commission creates cash flow issues - your money is stuck with the government until you file your return and get a refund.
Common issues and fixes
Issue: TDS not reflecting in 26AS
Fix: Contact the deductor. Share your correct PAN. Ask them to file a correction return (TDS return correction) with the correct PAN.
Issue: Deductor claims they haven't exceeded ₹15,000 threshold
Fix: TDS threshold is per deductor per financial year. If your commission from them genuinely hasn't exceeded ₹15,000, they're right - no TDS is required. Track this per principal.
Issue: TDS deducted but you received less than expected
Fix: Ask for a computation sheet. Verify: TDS should be 5% of commission before GST. If they're deducting on the GST-inclusive amount, they're over-deducting.
Issue: Cash flow squeeze from excess TDS
Fix: Apply for lower deduction certificate (Form 13). Or structure payments to spread across quarters.
Annual compliance calendar
| Month | Action |
|---|---|
| April | Start tracking commission income and TDS for new FY |
| July | File Q1 TDS return (if you're a deductor); verify Q4 credit in 26AS |
| October | File Q2 TDS return; verify Q1 credit |
| January | File Q3 TDS return; verify Q2 credit |
| March | Apply for lower TDS certificate for next FY (if needed) |
| May | File Q4 TDS return; reconcile full-year 26AS vs books |
| July | File income tax return with full TDS credits claimed |
How TripDraft helps
TripDraft's invoicing module generates proper commission invoices with GST and tracks your receivables - so you know exactly how much commission is due, how much TDS has been deducted, and what you should see in your 26AS.