Is TDS applicable on insurance premium?

Yes, TDS on insurance premium payment

is applicable. It is governed by Section 194D of the Income Tax Act, 1961.

Here are some key points for

TDS on insurance premium paid to insurance company

:

• It is applicable when the total premium paid in a financial year is more than Rs. 20,000.

• It is 5% of the premium amount. If the policyholder does not provide their Permanent Account Number (PAN) or Aadhar number, it is 20%.

• TDS is not deducted if the total premium paid in a financial year is not more than the threshold limit.

• Additionally, it is also not applicable for premiums paid on life insurance policies given under Section 10(10D) of the Income Tax Act.

• The insurance company is responsible for deducting TDS from the premium and provides a TDS certificate (Form 16A) to the policyholder.

• It can be used by the policyholder when filing their income tax returns.

This is all about

insurance premium TDS applicability.

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Hey buddy,

Insurance helps allevate the financial stress caused due to a medical emergency. That’s why you should take an insurance policy not just for yourself but for your dependents as well. People usually choose their insurance via brokers, agents, etc. In such situations, the insurance commission or any other reward/remuneration received by such brokers, agents, etc., are subjected to TDS as mentioned under the IT Act (Section 194D). But is TDS applicable on insurance premium? Let's find out:

Is TDS Applicable on Insurance Premium Paid

TDS isn’t applicable for an insurance premium. An employer can’t claim TDS benefit on an insurance premium as the insurance firm won’t accept deduction of TDS amount on an insurance premium.

TDS Deduction of tax is applicable only on reward or remuneration, by way of commission to be received by a broker or agent who has sold the insurance policy.

Now you know whether TDS is applicable on insurance premium or not.

When is TDS deducted under IT Act (Section 194D)

The deduction of tax on insurance commission under IT Act (Section 194D)

is based on which of the following comes earlier:

The payment is in cheque or cash or kind.

or

Tax is deducted at the time of commission’s credit in the payee’s account

Eligibility for deduction under IT Act (Section 194D)

The entity who makes the payment to the resident individual is required to deduct tax, as rewards/remuneration, by the way of commission or for these purposes:

• Continuance, revival, or renewal of policies of insurance.

• Obtaining or soliciting insurance business

Please remember that this provision applies from 01-06-1973 onwards.

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Now you know the answer to your query on “is TDS applicable on insurance premium”