TDS on Insurance Commission [Section 194D]

CA Raj Kumar - Avatar Image Written by CA Raj Kumar - Updated on September 1, 2017. Estimated Reading Time: 1 minute.
View more from: Income Tax Tax Deduction at Source

Section 194D deals with Tax Deduction on payment of insurance commission. This section casts responsibility on any person responsible for paying to a resident any income by way of remuneration or reward as a commission from the insurance business. Payment to non-residents is covered under section 195. This section covers TDS on payments of commission for insurance business obtained from a resident only.

When is TDS deducted under 194D

It casts responsibility to deduct TDS on any person who pays commission on insurance to a resident. Such income may be named by way of insurance commission or other remuneration. This section is applicable if such consideration is for soliciting or procuring insurance business (including the business relating to the continuance, renewal or revival of policies of insurance).

TDS is deducted either at the time of crediting the books of accounts or at the time of payment, whichever is earlier. Further, TDS under this section is deducted only when the amount credited or paid during the financial year is more than ₹ 20,000.

Current Rate of TDS under 194D

The current rate of TDS under this Section is 10%. However, as per section 206AA, if the receiver of such payment doesn’t furnish PAN, the highest of the below rates will be used.

  1. The rate specified in this section (i.e. 10% under this section);
  2. At the rate or rates in force; or
  3. At the rate of 20%.

So, if the receiver of such commission on insurance doesn’t furnish his PAN, TDS will be deducted at the rate of 20%.

Filing of Returns

Details of TDS deducted under this section is filed in Form 26Q. It should contain the details of commission paid/credited along with the sum of TDS deducted and deposited to the account of the Central Government.

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CA Raj Kumar

I love blogging and studying taxation. I write articles related to Tax laws and common issues in handling taxation in India. Often, common but small mistakes make things complicated. I write and share them to save precious time of others.

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