Table of Contents
1. Section 194D of the Income Tax Act, 2016
Section 194D contains provisions relating to TDS on insurance commission.
2. Who should deduct tax under this section?
Any person responsible for paying commission for soliciting insurance business should deduct tax under section 194D (includes commission on new, continuance, renewal or revival of insurance policies).
3. What is the maximum limit upto which no tax needs to be deducted under section 194D?
No tax needs to be deducted if the aggregate amount of insurance commission paid does not exceed Rs. 15,000 in a financial year.
4. Various types of commission and applicable TDS sections
- TDS on insurance commission (includes commission on new, continuance, renewal or revival of insurance policies) – Section 194D
- TDS on commission paid to lottery agent for purchase or sale of lottery tickets – Section 194G
- TDS on payment of any other commission – Section 194H
5. What is the rate at which tax is deducted under this section?
- TDS will be deducted at the rate of 10% in case of domestic companies, 5% if the payee is any person other than domestic companies.
- However, if the payee does not furnish his/her PAN, tax shall be deducted at the rate of 20%
- No surcharge or cess shall be levied over and above the mentioned tax rates.
6. Circumstances where no tax will be deducted as per this section:
TDS will not be deducted as per section 194D in the following cases:
- When the amount of commission or remuneration paid does not exceed Rs. 15,000.
- Self-declaration under Form 15G/15H has been submitted by the person receiving commission for non-deduction of TDS.
7. Is TDS under section 194D deductible on Reinsurance commission?
No, section 194D does not cover reinsurance commission.