Updated on: Apr 4th, 2024
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4 min read
Insurance can go a long way when it comes to mitigating the financial crunch caused due to medical emergencies. Therefore, it is advisable to take an insurance policy not only for oneself but for one’s dependents as well. Most times people choose their insurance via agents, brokers, etc. In such cases, the insurance commission or any other remuneration/reward received by such agents, brokers etc., are subjected to Tax Deducted at Source (TDS) as dictated under Section 194D of the Income Tax Act.
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The tax must be deducted by the entity who makes the payment to the resident person, as remuneration/ rewards, by the way of commission or for the following purposes:
Note that this provision applies from 1st June 1973 onwards.
The deduction of tax on insurance commission under Section 194D based on which of the following comes earlier:
Section 194D is applicable for all such payments made to a resident whether they are an individual, company or any other category of persons. The rate of TDS are mentioned below:
Details | Rate of TDS |
Persons other than a company | 5% |
Domestic Company | 10% |
There are two instances when TDS is not deducted under Section 194D:
An individual who receives a commission can make an application in Form 13 to the Assessing Officer for a certificate authorising the payer not to deduct any tax or to deduct tax at a lower rate. In accordance with section 206AA(4), no certificate under Section 197 for non-deduction or a lower rate of deduction will be given unless the application also provides the PAN of the applicant.
The due date to collect and deposit tax deducted on commission paid to insurance agents is 7th of next month.
The deductee/ recipient will receive TDS certificates summarising the insurance commission payments and the TDS thereon. The due dates for receipt of TDS certificates are mentioned below:
Months | Deadline for issuing the Certificate |
April – June | 15th August |
July – September | 15th November |
October – December | 15th February |
January – March | 15th June |
Insurance is crucial for emergencies. Section 194D of Income Tax Act regulates TDS on insurance commission. Rates vary for individuals and companies. TDS not applicable if commission is under Rs.15,000 or Form 15G/15H submitted. Due date to deposit TDS is the 7th of the following month. TDS certificates issuance follow specific deadlines.