What is a typical sales commission rate in India?

Typical commission rates in India: FMCG sales agents 2-5%, Pharma MR 5-15% plus incentives, Insurance agents 10-35% first year, Real estate brokers 1-2%, IT products 5-20%, Industrial products 5-10%, Direct selling MLM 20-40% of downline sales.

How is TDS deducted on commission income in India?

TDS is deducted at 5% on commission income above Rs 15,000 per year under Section 194H. If PAN is not provided, TDS rate is 20%. TDS is deducted by the payer (company), and the agent can claim credit in their income tax return.

Is GST applicable on commission income?

Yes, GST at 18% applies on commission income above Rs 20 lakh annual threshold for service providers. Agents earning above Rs 20 lakh must register for GST and charge 18% GST on their commission invoices.

Commission Calculator India 2026 — Free Sales Agent Commission Tool

Sales Commission in India — Complete Guide

Sales commission is the compensation paid to agents, resellers, and channel partners as a percentage of sales they generate. In India, commission structures vary significantly by industry. Understanding commission models helps both brands and agents design fair, motivating structures.

Flat Rate Commission: A fixed percentage on every sale, regardless of volume. Simple and easy to calculate. Most common for FMCG, pharma, and industrial products.

Tiered Commission (Slab): Higher commission rates for higher sales volumes. Motivates agents to push more. Example: 5% up to ₹5L, 8% for ₹5–10L, 12% above ₹10L monthly.

Recurring Commission: For subscription products or repeat orders. Agent earns on every renewal, not just the first sale. Common in SaaS, insurance, and subscription businesses.

TDS on Commission (Section 194H): Companies deduct TDS at 5% on commission payments above ₹15,000/year. Agents can claim this TDS credit while filing ITR. If agent is GST registered, they must charge 18% GST on their commission invoice.

Commission FAQs

Commission should cover agent costs and motivate effort. Rule of thumb: commission = 30–50% of gross margin on the product. If your product has 30% margin and you want 20% net, offer 8–12% commission. For FMCG: 2–5%. Pharma: 5–15%. IT products: 8–20%. Insurance: 15–35%.

Yes. Agents earning above ₹20 lakhs per year must register for GST and charge 18% GST on commission. Agents below ₹20L threshold are exempt but can register voluntarily if they want to claim input tax credit.

Commission: Agent earns % of sales value without owning stock. Margin: Reseller buys at lower price and sells at higher price — profit is the spread. Example: Commission agent earns 10% of ₹1L sale = ₹10,000. Reseller buys at ₹70K and sells at ₹1L = ₹30K margin (30%).

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