Threshold for TDS on Insurance Commission Now reduced from Rs.20,000 to Rs.15,000

Insurance company shall deduct Tax at Source (TDS) at the rate of 20% in excess of Rs 20,000/- paid during the financial year. Now as per Budget 2015-16, the threshold for TDS on insurance commission has been reduced from Rs.20,000 to Rs.15,000 and TDS on the same has been reduced from 10% to 5% of the amount.

What is Insurance Commission as per Section 194D?

“Insurance Commission” means any remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance).

TDS Rates:

Section	For Payment of	On Payments Exceeding	Individual/Others
194D	Payment of Insurance Commission	Rs. 15,000/-	5%

When the above Changes are going to be effective?

These amendments will take effect from 1st June, 2016.

Important Notes:

1. No surcharge or education cess is deductible / collectible at source on payments made to residents (Individuals / HUF / Society / AOP / Firm / Domestic Company) on payment of incomes other than salary or wages.
2. TDS at higher rate of 20% or TDS rate, whichever is higher, has to be deducted if the Insurance Agent does not provide PAN to the Life Insurer (as per Income Tax section 206AA).
3. Under section 197, the agent can applying in the Income Tax Form No. 13 to the income tax officer for lower deduction of TDS from his commission.