{"id":7771,"date":"2025-07-14T12:03:45","date_gmt":"2025-07-14T12:03:45","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7771"},"modified":"2025-07-14T12:03:49","modified_gmt":"2025-07-14T12:03:49","slug":"section-194d","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/section-194d\/","title":{"rendered":"Section\u202f194D"},"content":{"rendered":"<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/section-194d\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Section&#x202F;194D<\/a> of the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax-act\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax Act<\/a> mandates that anyone making payments to <strong>resident<\/strong> insurance agents, <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/broker\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>broker<\/a>s, or intermediaries for <strong>commission, remuneration, or rewards<\/strong> related to <strong>soliciting, procuring, renewing, or reviving insurance policies<\/strong> must deduct <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a> at source (<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tds\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>TDS<\/a>).<\/p>\n\n\n\n<h2 id=\"who-must-deduct-tds\" class=\"wp-block-heading\">Who Must Deduct TDS?<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Payer<\/strong>: Any person or entity (individual, HUF, company, firm) paying insurance-related commissions to residents.<\/li>\n\n\n\n<li><strong>Payees include<\/strong>: Insurance agents, brokers, advisors, or anyone earning such commissions.<\/li>\n\n\n\n<li><strong>Non-residents?<\/strong> Not applicable here; such commissions fall under Section&#x202F;195 .<\/li>\n<\/ul>\n\n\n\n<h2 id=\"when-is-tds-deducted\" class=\"wp-block-heading\">When Is TDS Deducted?<\/h2>\n\n\n\n<p>Deduct TDS on the <strong>earlier<\/strong> of:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>When commission is <strong>credited<\/strong> to the payee&#x2019;s account<\/li>\n\n\n\n<li>When it&#x2019;s <strong>paid<\/strong> in cash or through any mode.<\/li>\n<\/ol>\n\n\n\n<h2 id=\"threshold-rates\" class=\"wp-block-heading\">Threshold &amp; Rates<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Threshold Limit (from April 1, 2025)<\/strong>: No TDS if total commissions in FY &#x2264;&#x202F;&#x20B9;20,000 (previously &#x20B9;15,000).<\/li>\n\n\n\n<li><strong>TDS Rates<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>Residents (non-company)<\/strong>:&#x202F;5% (going forward, may reduce to 2% per Budget 2024) .<\/li>\n\n\n\n<li><strong>Domestic companies<\/strong>:&#x202F;10%.<\/li>\n\n\n\n<li><strong>Without PAN<\/strong>:&#x202F;20%.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 id=\"exemptions-lower-rate-requests\" class=\"wp-block-heading\">Exemptions &amp; Lower Rate Requests<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Aggregate commission &#x2264; &#x20B9;20,000<\/strong> in FY &#x2192; no TDS.<\/li>\n\n\n\n<li>Agent files <strong>Form&#x202F;15G\/15H<\/strong> (if eligible) &#x2192; no deduction.<\/li>\n\n\n\n<li>Payee can apply for <strong>lower or nil deduction<\/strong> via <strong>Form&#x202F;13<\/strong> under Section&#x202F;197.<\/li>\n\n\n\n<li><strong>PAN mandatory<\/strong> for certificates; a<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/bse\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>bse<\/a>nce leads to 20% TDS.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"compliance-deposits-returns-certificates\" class=\"wp-block-heading\">Compliance: Deposits, Returns &amp; Certificates<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>TDS deposit<\/strong>: By 7th of the next month (30th April for March).<\/li>\n\n\n\n<li><strong>Return filing<\/strong>: Quarterly <strong>Form&#x202F;26Q<\/strong>.<\/li>\n\n\n\n<li><strong>TDS certificate<\/strong>: Form&#x202F;16A issued by:\n<ul class=\"wp-block-list\">\n<li><strong>15th August<\/strong> for Apr&#x2013;Jun<\/li>\n\n\n\n<li><strong>15th November<\/strong> for Jul&#x2013;Sep<\/li>\n\n\n\n<li><strong>15th February<\/strong> for Oct&#x2013;Dec<\/li>\n\n\n\n<li><strong>15th June<\/strong> for Jan&#x2013;Mar.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 id=\"non-compliance-consequences\" class=\"wp-block-heading\">Non&#8209;compliance Co<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nse\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>nse<\/a>quences<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Interest penalty<\/strong>: ~1% per month from due date till actual deduction\/deposit.<\/li>\n\n\n\n<li><strong>TDS deposit defaults<\/strong> may attract further penalties under TDS rules.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"quick-snapshot\" class=\"wp-block-heading\">Quick Snapshot<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th>Feature<\/th><th>Details<\/th><\/tr><\/thead><tbody><tr><td><strong>Who deducts<\/strong><\/td><td>Any payer of insurance commission to a resident<\/td><\/tr><tr><td><strong>Threshold<\/strong><\/td><td>&#x20B9;20,000 per FY (from 1 Apr 2025)<\/td><\/tr><tr><td><strong>Rates<\/strong><\/td><td>5% (individual\/HUF), 10% (domestic company), 20% (no PAN)<\/td><\/tr><tr><td><strong>Timing<\/strong><\/td><td>At credit or payment, whichever first<\/td><\/tr><tr><td><strong>Exemptions<\/strong><\/td><td>&#x2264;&#x20B9;20k, Form&#x202F;15G\/H, Form&#x202F;13 certificate<\/td><\/tr><tr><td><strong>Compliance<\/strong><\/td><td>Deposit by 7th, file <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/form-26q\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Form 26Q<\/a>, issue <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/form-16a\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Form 16A<\/a><\/td><\/tr><tr><td><strong>Penalty<\/strong><\/td><td>1% interest per month for delay<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 id=\"why-it-matters\" class=\"wp-block-heading\">Why It Matters<\/h2>\n\n\n\n<p>Section&#x202F;194D ensures tax is reliably collected on commissions tied to insurance business. It applies to agents, brokers, and companies alike, with clear rules on rates, timing, exemptions, and compliance&#x2014;even before payments are finalized.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section&#x202F;194D of the <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax<\/a> Act mandates that anyone making payments to resident insurance agents, brokers, or intermediaries for commission, remuneration, or rewards related to soliciting, procuring, renewing, or reviving insurance policies must deduct tax at source (TDS). Who Must Deduct TDS? When Is TDS Deducted? Deduct TDS on the earlier of: Threshold &amp; Rates [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7771","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7771","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7771\/revisions"}],"predecessor-version":[{"id":7772,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7771\/revisions\/7772"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7771"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}