Guide to .. Tax Management ,Tax Planning and Tax Saving

TDS from Insurance Commission (Section 194D)

  1. Provisions of Section 194D towards TDS from Insurance Commission

  2. Who is required to make TDS under Section 194D ?

  3. When TDS under Section 194D has to Deducted ?

  4. Rate of TDS under Section 194D for the Financial Year 2018-19 and 2019-20

  5. Where No TDS is to be Deducted under Section 194D

  6. Where the Tax is either not to be Deducted or to be Deducted at Lower Rate [Section 197 Rule 28 and 28AA]:

  7. Reinsurance not covered by section 194D -

1. Provisions of Section 194D towards TDS from Insurance Commission

The Provisions of Section-194D towards Tax Deducted At Source (TDS) From Insurance Commission [ Section 194D] are given below---

Who is the taxpayer

Any person paying Insurance Commission

Who is the recipient

A resident person

Payment covered

Insurance Commission

At what time tax has to be deducted at source

At the time of payment or at the time of credit, whichever is earlier.

Maximum amount which can be paid without Tax Deduction

Any amount which is Rs. 15,000, or Less

(to be calculated on aggregate basis for the entire Financial Year)

Rate of TDS

Resident Person other than Company 5%
Domestic Company 10%

Is it possible to get the payment without tax deduction or with lower tax deduction

The recipient can make an application in Form No.13 to the Assessing Officer to get a certificate of lower tax deduction or no tax deduction.

2. Who is required to make TDS under Section 194D ?

The person responsible for paying to a Resident, the income mentioned below.

Remuneration or reward whether by way of commission or otherwise—

  1. for soliciting or procuring insurance business, or

  2. for continuance, renewal or revival of policies of insurance.

Payment to Non-Resident shall be covered under Section 195

3. When TDS under Section 194D has to Deducted ?

  • At the time of credit of commission income to the account of payee or

  • the payment thereof in cash or by issue of a cheque or draft or by any other mode,

whichever is Earlier.

4. Rate of TDS under Section 194D for the Financial Year 2018-19 and 2019-20

Payee whose payment will suffer TDS Rate of TDS
Resident Person other than Company 5%
Domestic Company 10%


  1. No surcharge, education cess or SHEC shall be added to the above rates. Hence, tax will be deducted at source at the basic rate.

  2. The rate of TDS will be 20% in all cases, if PAN is not quoted by the deductee.

Section 194D applies in relation to all such payments made to a resident whether individual, company or any other category of person. These provisions do not restrict the deduction of tax at source to insurance commission paid only to individuals.

5. Where No TDS is to be Deducted under Section 194D

(A) When insurance commission paid or credited does not exceed Rs. 15,000:

No tax is to be deducted if the amount or the aggregate amounts of such income does not exceed `15,000 in a financial year.

(B) Where a self declaration under Form No. 15G/15H is furnished by a particular person [Section 197A(1A), (1B) and (1C)]:

A person, other than a company or firm may furnish a declaration in writing in duplicate in new Form No. 15G to the payer to the effect that there is no tax payable on his Total Income. In this case, the payer shall not deduct any tax at source.

However, as per section 197A(1B), the assessee cannot furnish the declaration under this clause if the aggregate amount of the following incomes credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to tax:

  1. Payment from accumulated balance of recognized provident fund, if taxable.

  2. Interest on securities.

  3. Interest other than interest on securities.

  4. Payment in respect of life insurance policy, if taxable.

  5. Insurance commission

  6. Payment in respect of deposit under National Saving Scheme.

  7. Payment in respect of rent.

As per section 206AA(2), declaration under Form No. 15G or 15H shall not be valid if it does not contain the Permanent Account Number (PAN) of the declarant. In case any declaration becomes invalid, the deductor shall deduct the tax @ 20% except where the payment is made from accumulated balance of recognised provident fund where it will be deducted at the maximum marginal rate.

The payer of the income is required to deliver to the Principal Commissioner or Commissioner one copy of declaration given under new Form 15G on or before the 7th day of month next following the month in which the declaration is furnished to him.

6. Where the Tax is either not to be Deducted or to be Deducted at Lower Rate [Section 197 Rule 28 and 28AA]:

Any person to whom commission is payable may make an application in Form No. 13 to the Assessing Officer and obtain such certificate from him, as may be appropriate, authorising the payer not to deduct tax or to deduct tax at a lower rate.

As per section 206AA(4), no certificate under section 197 for deduction of tax at Nil rate or lower rate shall be granted unless the application made under that section contains the Permanent Account Number (PAN) of the applicant.

7. Reinsurance not covered by section 194D -

Reinsurance differs from insurance in a number of ways and the most important is that there is no contractual relationship between the Direct Insured and the Reinsurer.

There are separate contracts involved—one between the Insured and the Insurer and another between the Insurer and the Reinsurer. Insurer has to pay all valid claims to the insured, irrespective of whether the insurer can recover the same from his reinsurer.

When an Reinsurance company gets business from insurance company at premium less “Commission”, the “Commission” is not subject to TDS under section 194D, as it is not payable to an agent for procuring insurance business.

Similarly, when “Profit Commission” is payable by an Reinsurance Company to an insurance company, after the expiry of the term of insurance, in respect of such cases where there is no claim during the operation of the reinsurance treaty, TDS under section 194D is not required.

More Topics ...
Various Authorities
Power Of Income Tax Authorities Relating To Search And Seizure [ Section 132 ]
Application Of Seized Or Requisitioned Assets [Section132(B)]
Power Of Survey [ Section 133a ]
Provision Relating To Power To Collect Certain Information [Section 133b]
Disclosure Of Information Regarding Assessees To Certain Authorities [ Section 138 ]
Payment of Tax
Modes of recovery of Tax
Introduction- Deduction of Tax at Source (TDS)
Deduction of Tax from the “Salary” [ Sec-192]
Deduction Of Tax From Interest On Securities [ Section-193]
Deduction Of Tax From Deemed Dividend [ Section-194]
Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
Winning From Lottery Or Crossword Puzzle Or Card game And Game Of Any Sort [Section 194B]
Winning From Horse Race [ Section 194BB]
Payment To Contractor And Sub-Contractor [ Section 194C]
Tax Deducted At Source From Insurance Commission [ Section 194D]
Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]
Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]
Commission Or Brokerage [ Section 194H]
Payment Of Rent [ Section 194 I ]
Fees For Professional Or Technical Services [ Section 194J]
Time Limit For Filling Return Of Income [ Section 139(1)]
When Return Of Loss Should Be Filed [ Section 139(3)]
Can Return Be Filied Beyond Time [ Section 139(4)]
Can Revised Return Be Filed [ Section 139(5)]
What Is A Defective Or Incomplete Return [ Section 139(9)]
Who Should  Sign The Return Of Income [ Section 140]
Permanent Account Number (PAN)
Why Every Person Needs Tax Planning ?
How is Tool of Tax Planning Exercised ?
Methods Of Tax Planning
Tax Avoidance
Tax Evasion
The Difference Between ‘Tax Planning’ And ‘Tax Management’
The Difference Between ‘Tax Avoidance’ And ‘Tax Evasion’.
Procedure for imposing Penalty [ Sec. 274]
Various Types Of Penalties In The Event Of Default.
Salient Features Of FBT
Important Points Relating To Fringe Benefit Tax
Characteristics Of FBT
Classification Of Employer For FBT
Classification Of Not Employer For FBT
Direct Fringe Benefit
Deemed Fringe Benefit
Payment Of FBT To The Government
Filing Of FBT Return
Service Tax – Key Provisions At A Glance
Applicability Of Service Tax
Service Tax Rate
Registration Formalities
Payment & Refund Of Tax
Filling Or Returns
Central Value Added Tax (Cenvat) Credit
Penalties & Prosecutions
Concept of VAT
Types of Dealers
General terminology used in VAT
Advantages of VAT over Sales Tax
VAT Rates
Computation of VAT and Profit
Items Covered in Indian VAT
Inter-State Sale
What are the objectives of CST Act ?
What are the conditions for CST Act to become applicable.
Rate of CST
Sale Price
CST Transactions Forms

Classification of Seller for TCS
Classification of Buyer for TCS
Goods and Transactions classified under TCS.
Certificate of TCS
TCS Exemptions
Payment of TCS to the Government
Electronic TCS (e-TCS)
Filing of TCS Returns
For removing any Asset, Books of account, documents etc. found during search in contravention of order served under [Section 132 (3)]
Removal, Concealment, transfer or delivery of property to avoid tax recovery [Section 276]
Default on the part of Liquidator [Section 276 (A)]
Failure to comply with provisions regarding transfer of immoveable property [Section 276 AB].
Failure to pay the tax deducted at source [Section 276 W]
Failure to pay the tax collected at source [Section 276 (BB)]
Willful attempt to evade Tax, Penalty, Interest etc. [Section 276 C (1)]
Failure to furnish return of income (Section 276 CC)
Failure to furnish return of income in search cases u/s 158 BC (Section 276 CCC)
Failure to produce accounts and documents [Section 276 (D)].
False Statement in Verification [Section 277]
Falsification of books of account or document, etc. [Section 277A]
Abetment in False Return (Section 278)
Punishment of Second and Subsequent Offences (Section 278 A)
Punishment not to be imposed in certain cases (Section 278 AA)
Offences by Companies (Section 278 B)
Offences by Hindu Undivided Families. (Section 278 C)
Presumption as to Assets, Books of Account etc. in certain cases. (Section 278 D)
Prosecution to be at the instance of commissioner [Section 279]
Meaning of Settlement Commisions
Setting Up Of Settlement Commission
Constitution Of Settlement Commission [Section 245B]
Jurisdiction And Powers Of Settlement Commission [Section 245BA]
Vice-Chairman To Act As Chairman [Section 245 BB]
Transfer Of Cases [Section 245 BC]
Decision To Be Majority [Section 245 BD]
Application For Settlement Of Cases [Section 245 C]
Calculation Of Additional Income-Tax [Section 245C (1A)]
Bar On Making Application [Section 245C (1E)]
Procedure On Receipt Of Application [Section 245D]
Payment Of Additional Income-Tax [Section 245D (2A)]
Power Of Settlement Commission To Order Provisional Attachment To Protect Revenue [Section 245DD (1)]
Get.. Tally.ERP9 Book + GST Practical Assignment @ Rs.550 Tally.ERP9 Book Online Order Tally.ERP9 Book Content
© 2019 : IncomeTaxManagement.Com