Key takeaways
- Commission and retail profit are income. Report both.
- Companies usually deduct TDS on commission. Keep the certificates to claim credit.
- GST depends on turnover and the nature of supply. Check before you cross the line.
- This is general information. Ask a chartered accountant about your case.
How is direct selling income taxed in India?
In India, direct selling commission and retail profit are taxable income. Companies usually deduct tax at source (TDS) on commission before paying it, and you report the income in your tax return and claim credit for the TDS. GST registration may be needed if your turnover from supplying goods crosses the threshold.
This page is general information, not tax advice. Rates, thresholds and section numbers change, and India's income tax law was rewritten from April 2026, so confirm current rules on the official sites or with a chartered accountant.
What counts as income
| Stream | Usually treated as | Who reports it |
|---|---|---|
| Retail margin (sell at MRP what you bought at DP) | Business income from trading goods | You, in your return |
| Commission and bonuses paid by the company | Business or commission income | The company reports TDS; you report the income |
| Prizes, trips and incentives | Taxable benefit in many cases | Ask your accountant |
TDS on commission
- The company typically deducts tax at source from commission, under the commission provision of the Income-tax law (known as section 194H in the 1961 Act).
- The rate and the minimum threshold have changed in recent years, and the section numbers changed with the new Act. Check the current rate and section on the Income Tax Department site.
- Give the company your PAN. Without it, deduction can be at a higher rate.
- Download your TDS certificates and check Form 26AS or the annual tax statement to see what has been credited.
GST: the questions to ask
- What are you supplying? Reselling goods you bought is different from earning commission as a service.
- What is your total turnover? Registration is generally needed once it crosses the threshold for your state and type of supply.
- Does the company deal with your GST? Some companies bill sellers in a way that changes your obligations.
- Are you below the threshold? You may still choose to register, which has its own rules and benefits.
You can check a registration on the GST portal. A chartered accountant can say whether you need to register.
Filing your return
- Which return form applies depends on your income sources and whether you're eligible for simplified (presumptive) taxation.
- Include all income, including commission shown in your tax statement.
- You may deduct genuine business expenses, such as delivery and event costs, if you can prove them.
- If your tax liability is above the threshold, advance tax instalments may apply.
Records to keep
- Company invoices and statements for every purchase.
- Your own sales log: date, customer, product, amount.
- TDS certificates and the annual tax statement.
- Receipts for events, delivery and tools.
- Bank or UPI records, kept separate from household spending where possible.
Also see direct selling in India, and for the US equivalent, 1099 and Schedule C.
Frequently asked questions
Do direct sellers have to pay income tax in India?
Yes. Commission, bonuses and retail profit are income and must be reported in your income tax return if your total income is above the filing requirement or tax has been deducted. The right treatment depends on your situation, so confirm with a chartered accountant.
What is TDS on direct selling commission?
Tax deducted at source: the company deducts a percentage of your commission before paying you, under the commission provision of the Income-tax law, and deposits it with the government. You can claim credit for it when you file your return. The section number and rate change, so check the current ones.
Do I need GST registration to sell direct selling products?
It depends on your turnover, what you supply and your state. Registration is generally required above a threshold and in some cases below it. Ask a chartered accountant or check the GST portal, because rules and thresholds change.
Sources
- Income Tax Department, India. www.incometax.gov.in
- GST portal, India. www.gst.gov.in
- Department of Consumer Affairs, India: Consumer Protection (Direct Selling) Rules, 2021. consumeraffairs.nic.in