Section 194D: TDS against Insurance commission to insurance agents

Section 194D: 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 (including business relating to the continuance, renewal or revival of policies of insurance) shall, 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, deduct income-tax thereon at the rates in force.

Provided further that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed twenty thousand rupees.

In simple terms, under this section insurance companies like LIC, HDFC Insurance, ICICI Insurance etc. are liable to deduct TDS from The Payment of Insurance Commission to insurance agents.

Who is required to deduct TDS Section 194D?

Any person who pays to resident an income in the form of remuneration or reward as commission or otherwise for generating insurance business. And the time deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment in cash, cheque, draft or other modes. 

Threshold limit for TDS 

Amount or the aggregate amounts > Rs. 20,000 from financial year 2025-26 before its Rs. 15,000.

Payer 

The person responsible for paying income by way of remuneration or reward for soliciting or procuring insurance business.

Payee

Any Resident

Rate of TDS 

1. Other than company - 2% (5% from financial year 2024 – 25) if the payee is a non-corporate resident. 
2. 10% if the payee is a domestic company.
3. 20% if the deductee PAN number of deductee is not available.

No TDS 

If the amount of such income whether individually or in aggregate for the financial year does not exceed Rs. 15,000 or if Form 15G or 15H has been received then no TDS section 194D is required.

Time of Deduction

At the time of credit of such income to the account of the payee or at the time of payment whichever is earlier.

1. Credit given to account
2. Actual payment mode 
3. Whichever is earlier

Deposit of TDS

Tax deducted by an office of Government 

1. Without an income tax challan – deposit on the same day
2. With an income tax challan – deposit within 7 days from the end of the month in while the deduction is made

Others Deductors

1. If credited or paid in march – 30th April
2. With an income tax challan – deposit within 7 days from the end of the month in while the deduction is made

Quarterly statement filing (rule 31a) and furnishing certificate of TDS (rule 31)

1. Payer must submit a quarterly statement (Form 26Q) for tax deducted at source
2. Payer must furnish certificate of TDS in Form 16A within 15 days from the due date for furnishing TDS statement

Quarter	Due date for statement filing	Deadline for issuing certificate
April – June	31st July	15th August
July – September	31st October	15th November
October – December	31st January	15th February
January – March	31st May	15th June

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