Insurance Commission Sec 194D

ØAs per provisions of section 194D, the person who is responsible for making payment to a resident person for the below-mentioned income is required to deduct TDS –

Income by way of remuneration/reward, whether by way of commission or otherwise –

-For Soliciting / procuring insurance business; or

-For the continuance, renewal, or revival of an insurance policy.

ØThus, provisions of section 194D applies only to the payment made to a resident person. Payment made to a non-resident person is not covered under section 194D,

Ø New Rate of TDS 3.75%: Such a person is required to deduct income tax at the rate of 3.75% And Old Rate 5%

Ø If the PAN is not furnished, the Deductor is required to deduct TDS @20%.

Ø Time to Deduction: The Deductor who is liable to deduct TDS under provisions of section 194D of the Income Tax Act, 1961 is required to deduct TDS within earlier of the following dates –

-At the time of credit of income to the account of the payee; or

-At the time of payment in cash, cheque, draft, or by any other mode.

ØThreshold Limit :

Under the following cases, the TDS is not to be deducted –

-The aggregate amount of income credited/paid during the financial year to the payee’s account doesn’t exceed INR 15,000.

-The payee has furnished self-declaration under Form 15G / Form 15H.

Regards

Compiled by CA Sunil Sakral