TDS on Insurance Commission Under Section 194D of the Income Tax Act

It is suggested that every individual must get an insurance policy to cover for any unexpected financial burden. You can buy insurance policies through online websites, agents, or brokers. It is important to note that the commission, remuneration, or reward earned by these agents/brokers are subject to TDS (Tax Deducted at Source) under Section 194D of the Income Tax Act.

Section 194D applies to a resident irrespective of whether they are an individual, company, or any other category of persons. The TDS rate under Section 194D is as follows:

An entity shall deduct TDS when making the payment to a resident person as remuneration, reward, or commission for the following reasons:

• Bringing/obtaining insurance business

• Ensuring continuance, renewal, or revival of insurance policies

Here are two instances when you can opt for an income tax exemption:

• The commission amount does not exceed ₹15,000

• A self-declaration form 15G/15H has been submitted by the payee

Here are the instances when taxpayers need to deduct the TDS amount under Section 194 of the Income Tax Act (whichever is earlier):

• When the money is credited to the payee's account

• When the payment is made in cash, draft, cheque or through other modes

Under Section 197 of the aforementioned act, you can submit Form 13 to the Assessing Officer to deduct a lower no nil TDS. According to Section 206AA(4), no certificate shall be given for non-deduction or a lower rate of TDS unless the applicant provides the PAN details.

Check out the due date to deposit TDS and issuance of TDS certificate as per Section 194D of the Income Tax Act:

1. Due Date to Deposit TDS

The due date to deduct and deposit the TDS amount on commission is the 7th of the next month.

2. Due Date to Issue TDS Certificates

The payee will receive TDS certificates which summarise the insurance commission payments and the deducted TDS. The due dates for the receipt of these certificates are as follows: