Section 194D - TDS on Insurance Commission - Income Tax - Ready Reckoner - Income Tax

Section 194D : TDS on Insurance Commission Any person responsible for paying to a resident any income by way of remuneration or reward, whether by way of commission or otherwise- for soliciting or procuring insurance business or for continuance, renewal or revival of policies of insurance Time of Deduction - At the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier. Rate of TDS Rate of TDS in case PAN is Quoted When recipient is Resident person other than Company - Upto 31.03.205 - 5% From 01.04.2025 - 2% [amended vide Finance Act. 2025 ] When Recipient is a Domestic Company - 10% Rate of TDS in case where PAN is not Quoted - 20% Threshold Limit - Upto 31.03.2025 - the aggregate of the amounts does not exceeds Rs. 15,000. From 01.04.2025 - the aggregate of the amounts does not exceeds Rs. 20,000/-. [amended vide Finance Act. 2025 ] Note: Reinsurance not covered by section 194D - Reinsurance differs from insurance in number of ways and the most important is that there is no contractual relationship between the direct insured and reinsurer. There are separate contract involved - one between the direct insurer and another between the insurer and the reinsurer. Insurer has to pay all valid claims to insured, irrespective of whether the insurer can recover the same from his reinsurer. [ Refer GENERAL INSURANCE CORPORATION OF INDIA. VS. CIT - 2009 (2) TMI 234 - ITAT BOMBAY-G , PR. CIT Vs. TATA AIG GENERAL INSURANCE CO. LTD. 2019 (8) TMI 1803 - BOMBAY HIGH COURT ] If the recipient does not furnish his PAN to the deductor, tax will be deducted at the rate of 20%. PAN of the deductee should be mentioned in any correspondence and document which is exchange between the deductor and deductee. w.e.f. 01.04.2024 The Central Government hereby notifies that no tax deduction shall be made under section 194D on payments of insurance commission made by any payer to a person who is a Unit of an International Financial Services Centre (hereinafter referred to as payee ), provided the payee is an IFSC Insurance Intermediary office. This exemption is subject to the fulfillment of the conditions specified in Notification No. 28/2024 , dated March 7, 2024.