TDS section 194D

A summary of Section 194D

What is Section 194D?

Section 194D of the Income Tax Act deals with the deduction of TDS on insurance commissions. According to this section, if someone pays a resident income through an insurance commission, they must deduct tax at the source. The person deducting taxes must pay the deducted amount to the government within the time limits provided. This rule is only applicable for annual income above ₹15,000.

Eligibility for Section 194D

Eligible individuals must have one of the following ways of income for TDS deduction:

  • For Income earned through salary, rewards, or commissions.
  • For requesting or getting insurance business.
  • For business linked to the growth, renewal, or revival of an insurance policy.

This section only applies to Indian residents who are individuals, HUFs, businesses, or other taxpayers.This section covers the TDS on insurance commissions paid to non-residents in India.

Rate of TDS deduction under Section 194D

The TDS deduction rate under this section is:

  • 5% – if the payee is an individual or HUF receiving a commission.
  • 10% – If the payee is a domestic company, that gets a commission.
  • 20% – If the payee’s PAN is not provided.

Exemption under Section 194D

TDS will not be deducted from commissions given to insurance agents or brokers under this section in the following situations:

  • If commissions paid in a financial year do not exceed Rs. 15000/-
  • If the agent/broker has completed a self-declaration using form 15H/15G.

Lower Deduction or No Deduction of TDS

To prevent higher tax deductions, fill out Form 13 and submit it to the assessing office. This form serves as a certificate, allowing the payer to either not deduct TDS or deduct it at a lower rate. To get a certificate under Section 197, enter your PAN number as specified in Section 206AA(4). If the declaration is invalid, the deductor must deduct TDS at 20%. 

In addition, the deductor must provide a copy of Form 15G to the Principal Commissioner or Commissioner. Make sure the declaration is submitted by the 7th of the month following the one in which the deductor received it.

Due Date to Deposit TDS Under Section 194D

According to Section 194D of the Income Tax Act, the insurance commission’s TDS deduction and deposit deadline is the 7th day of the following month. The deadline for paying the TDS amount with the government, if it is taken out of the insurance commission in March, is April 7 of the next fiscal year.

Due Date to Issue TDS Certificates

Months The last day to issue the certificate
April – JuneAugust 15
July – SeptemberNovember 15
October – DecemberFebruary 15
January – MarchJune 15

Penalty for Late Deduction of TDS

If the person in charge of deducting TDS (Tax Deducted at Source) under Section 194D fails to do so when making a payment, they will be charged by 1% for each month or part of a month from the date when TDS should have been deducted to the actual deduction date.

With that, we end our discussion on Section 194D. If you have any questions, drop them in the comment section below.


1. Which ITR applies to this section?

Ans: Section 194D covers ITR-3.

2. What is the TDS rate under this section?

Ans: The following is the TDS rate under this section:

  • 5% for individuals other than companies.
  • 10% for local businesses.

3. Is there a tax exemption under this section?

Ans: Yes, you can get an income tax exemption in the following cases:

  • The commission does not exceed Rs. 15, 000.
  • The payee has submitted a self-declaration form (15G/15H).

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