What is Section 194D?
Section 194D of Income Tax Act covers the provisions relating to the deduction of TDS on insurance commission. As per the provisions of section 194D, the person who is responsible for making payment to a resident person, as remuneration/ rewards, by way of commission or for the following purposes:
- For Soliciting / procuring insurance business; or
- For the continuance, renewal, or revival of an insurance policy.
TDS is required to be deducted only when the aggregate of the amounts of such income credited or paid or likely to be paid or credited during the financial year exceeds INR 15,000 (Applicable from June 1st 2016).
When is TDS deducted u/s 194D?
The deduction of tax on the insurance commission under Section 194D shall be earlier of the following:
- The credit of commission to the account of the payee(receiver), or
- The actual payment is in cash or cheque or in kind.
There are 2 instances when TDS is not deductible under Section 194D:
- Commission paid does not exceed INR 15,000
- Self-declaration under Form 15G/ 15H
Rate of TDS u/s 194D
If the provisions of section 194D of the Income Tax Act, 1961 are applicable, the Deductor shall deduct TDS at the following rates:
| Particulars | Rate of TDS |
| Domestic Company | 10% |
| A Resident person other than a Domestic Company | 5% |
The rate of TDS will be 20% in cases where the deductee has not quoted PAN.
TDS Certificate
Deductors of tax shall issue a TDS certificate to the deductee in Form 16A for tax deducted at source other than salary. You can download a certificate from here. The due dates for receipt of TDS certificates are as below:
| TDS for the Quarter | Due-Date |
| April-June | 15th August |
| July-September | 15th November |
| October-December | 15th February |
| January-March | 15th June |
TDS Return
The Deductor liable to deduct tax under section 193 of the Income Tax Act shall file quarterly returns in Form 26Q.
FAQs
The Deductor is liable to deduct TDS as per the provisions of section 194D, if he fails to deduct the same, then, in such case, the Deductor is liable to pay interest @ 1% per month from the date on which tax was deductible till the date TDS actually deducted.
No, TDS is not deductible on commission paid on reinsurance.
A payee can approach the payer for non-deduction of tax at source but for that, they have to furnish a declaration in Form No. 15G/15H.
Form No. 15G is for the individual or a person (other than a company or firm) and Form No. 15H is for senior citizens.
Hey @Dia_malhotra
As per section 194A, TDS on interest other than interest on securities is required to be deducted by any person other than Individual or HUF at the rate of 10%, when paid to a resident. No surcharge, education cess or SHEC shall be added to the above rate.
Hope this helps!
Hey @HarishMehta
TDS u/s 194J needs to be deducted by deductor other than an individual or a HUF, @ 10% on any amount paid or payable to any which is in excess of INR 30,000 as:
Hope this helps!
Hello @the_AK,
Against gross income, you can claim business expenses that you have incurred for earning that income. So you can claim this service fee as a business expense from the gross income received by you.
Hope this helps!
Hey @Bharti_Vasvani can you please help here?
Hello @Anuj_Agarwal,
TDS will be deducted by the company when the interest is actually paid on the securities, so at that time whoever is the owner of such security shall receive the interest and can claim credit of interest.
Hope this helps!
Hey @Anuj_Agarwal,
You can check out this article for more clarity:
Hope this helps!
I have respectable salary income and 1000 insurance commission…ie old commission…not claiming any expenses…can i show it as other income in itr1 or have to file itr 3
Hi @Shivam_B
If you have income from salary and income from insurance commission (business income), then you will be required to file ITR 3.
Itr 3 is so big…have to pay heavy charges…for filing…will it be defective if i do so ie reporting 1000 as other income in itr1 along with salary income…have closed down the insirance work since yesrs…i even contacted commssiom giving broker and closed my commission account…still they are showing in 26as wheress i am not receiving in real
Hi @Shivam_B
As per the recent utilities, ITD gives you the option to select only the schedules applicable to you while filing ITR.
Thus, you are not required to go through the entire ITR 3 form. You can also prepare and file ITR on Quicko, where you can upload form 16 and add commission income under the head “Business & Profession” and file ITR 3, without any charges as Quicko is a DIY platform helping individuals to file taxes.