Commission Calculator
Calculate sales commission and net payout from a sale amount and commission rate.
Formula last reviewed 4 August 2026 · How we verify our calculators
Commission earned
- Amount after commission
- ₹4,75,000
Updates live as you type
Frequently asked questions
Multiply the sale amount by the commission rate divided by 100. A 5% commission on a ₹5,00,000 sale is ₹25,000.
In a tiered structure the rate rises as sales cross thresholds, with each band paid at its own rate — much like income tax slabs. This rewards higher performance.
It depends on the agreement. Many plans pay on revenue (sale amount), but some pay on gross profit. Enter the base your plan actually uses.
Yes. Commission income is taxable and may have TDS deducted at source. The figure here is the gross commission before any tax.
Twenty-five thousand on a five-lakh sale
A sale of ₹5,00,000 at a 5% commission produces ₹25,000 for the salesperson, leaving ₹4,75,000.
Commission = sale amount × rate ÷ 100 = 5,00,000 × 0.05 = ₹25,000
Simple arithmetic, and the whole of the complexity in commission sits in what the rate applies to and when it is paid.
The base matters more than the rate
A 5% commission means very different amounts depending on what it is 5% of:
Gross sale value — the largest base, and the simplest. Used where the salesperson has little control over cost.
Net of taxes and discounts — common and considerably lower. A 5% commission on a ₹5,00,000 invoice that includes 18% GST is really 5% of ₹4,23,729, giving ₹21,186 rather than ₹25,000.
Gross profit — used where the salesperson can negotiate price. This aligns incentives properly, because discounting then costs the salesperson directly rather than only the company.
Collected amount — paid only on money actually received, which protects the company from paying commission on a sale that is never paid for.
A contract that says "5% commission" without specifying the base is a dispute waiting to happen, and the difference between the widest and narrowest base is frequently 30% or more of the payout.
Common structures
Flat rate — one percentage on everything. Simple, predictable, and does not differentiate effort.
Tiered — the rate rises with cumulative sales. For example 3% up to ₹10 lakh, 5% from ₹10–25 lakh, 7% above. Strongly motivating near a threshold, and it creates an incentive to push deals into the next period if a tier will not be reached this one.
Draw against commission — a guaranteed minimum paid as an advance, recovered from future commission. A recoverable draw must be repaid if commission falls short; a non-recoverable draw does not. The distinction is important and frequently unclear in the offer letter.
Split commission — shared between the person who sourced the lead and the person who closed it, with a stated ratio.
Clawback — commission reversed if the customer cancels, returns the goods or fails to pay within a stated period. Standard in insurance and subscription businesses, and worth understanding before counting the money.
Tax treatment
For an employee, commission is part of salary, taxed at slab rates with TDS deducted under Section 192 along with the rest of the pay.
For an agent or independent contractor, commission is business income, and the payer generally deducts TDS at 5% under Section 194H where the amount exceeds the annual threshold. That TDS is an advance, not a final tax — the recipient still reports the income and pays at their slab rate, claiming credit for what was deducted.
Commission agents also need to watch the GST registration threshold, since agency services are subject to GST and the threshold for services is ₹20 lakh of turnover.
Reading the result
The amount after commission is what remains of the sale value, useful for understanding the effective cost of the sales channel.
A useful sanity check for any commission structure: the total commission cost as a percentage of gross margin, not of revenue. A 5% commission on a product with a 15% gross margin consumes a third of the profit on every sale, which is a very different business decision from 5% on a 60% margin.
Common mistakes
Leaving the base unspecified. Gross, net, profit and collected give very different answers.
Computing on a GST-inclusive invoice. It overstates commission by roughly the tax rate.
Ignoring clawback terms. Commission received is not always commission kept.
Confusing recoverable and non-recoverable draws. One is an advance; the other is pay.
Measuring commission against revenue rather than margin. On a thin-margin product it can consume most of the profit.