# Section 194D - TDS on Insurance Commission

## Who Deducts

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

## On What

Income by way of commission / remuneration / reward for soliciting or procuring insurance business.

## Payee

Any resident.

## Threshold

Amount or aggregate amount > ₹ 20,000 in a F.Y.

## Rate of TDS

Payee	Rate
Non-corporate resident	2%
Domestic company	10%

## When to Deduct

At the time of credit to the account of the payee OR at the time of payment, whichever is earlier.

Worked example

### Example 1

Example: LIC pays insurance commission of ₹ 50,000 during F.Y. to Mr. X (resident individual agent).

Solution: Amount exceeds ₹ 20,000 → TDS @ 2% (non-corporate).

TDS = 2% × ₹ 50,000 = ₹ 1,000.

### Example 2

Example: New India Assurance pays ₹ 80,000 commission to ABC Pvt. Ltd. (a corporate agent).

Solution: TDS @ 10% (domestic company).

TDS = 10% × ₹ 80,000 = ₹ 8,000.

⚠️ Common exam mistakes

Applying 10% rate to individual agents — the 10% rate is only for domestic companies
Confusing 194D (insurance commission) with 194H (general commission/brokerage)

Bare-Act text Section 194D · Income-tax Act, 1961 · click to expand

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 shall, at the time of credit or payment, whichever is earlier, deduct income-tax thereon at the rates in force.

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