Commission Calculator

Commission = Sale value × Commission% ÷ 100

Net payout = Commission − Tax withheld (if any)

Retained = Sale value − Commission

Withholding applies only in some countries. In India, commission and brokerage attract TDS under section 194H, generally at 2%.

A $25,000 sale with 5% commission means $1,250 commission paid to the agent, leaving $23,750 with the business.

India example, with TDS: a ₹2,50,000 sale at 5% commission is ₹12,500 commission, ₹250 TDS at 2% and a ₹12,250 payout, leaving ₹2,37,500 with the business.

Commission is one of the most common variable-pay structures in sales, and the structure matters as much as the rate. Commission on sale value is simple to administer but rewards volume even when it is discounted; commission on gross profit protects margin and keeps the agent aligned with pricing discipline. Slab structures (a base rate up to a target and a higher rate beyond it) work well where you want to push for growth without inflating the cost of routine business.

Tax on commission depends on where you operate. Some countries make the payer withhold tax from the payout: in India, for example, TDS under section 194H applies at 2% on commission and brokerage once yearly payments to that agent cross the threshold. Where the agent is registered for VAT or GST, they may add it to their commission invoice, and a registered business can often reclaim it, so the net cost of the commission can be lower than the headline figure suggests.

Write the base into the agreement explicitly: gross value or taxable value, before or after discount, on booking or on collection. Most commission disputes come from an unstated assumption rather than a disputed rate, and paying on collection rather than on booking keeps your cash flow aligned with the payout.