Deduction of income-tax at source-Section 194D of the Income-tax Act, 1961-Deduction from Insurance Commission etc.-Financial year 1977-78

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....p;  Government of India. To             All Insurance Companies. Sir, Subject: Deduction of income-tax at source-Section 194D of the Income-tax Act, 1961-Deduction from Insurance Commission etc.-Financial year 1977-78. I am directed to invite a reference to this department's Circular No.216 (F.No.273/20/77-IT(B)* dated 31-3-1977 on the above subject. 2. Section 194D of the Income-tax Act, 1961, provides for the deduction of tax at source, at such rates as may be specified in this behalf by the Finance Act of the relevant year, from payments of income by way of insurance commission, to a resident, whether an individual, a company or any other category of person. Th....

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....ich is not a domestic company, tax is to be deducted at the rate of 73.5% (income-tax 70% plus surcharge 3.5%). 4. It is requested that deduction of tax at source from payments of income by way of insurance commission may be made during the financial year 1977-78 on payments made after 17th June, 1977, according to the above rates. In case any changes in the rates proposed in the Finance (No.2) Bill, 1977, are made by Parliament, suitable instructions will be sent to you. 5. The substance of the main provisions of the law in so far as they relate to deduction of income-tax from insurance commission is given hereunder:  (i) For the purpose of deduction of tax at source "insurance commission" will mean any income by way of remun....

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.... or more to one rupee.  (vi) At the time of deducting tax from the insurance commission credited to an agent's account, adjustment for any debits made in his account in respect of excess commission credited or paid to him earlier is not permissible and income-tax must be deducted from the full amount of commission credited to his account.  (vii) It will be open to the recipient of the commission to make an application in Form No.13D to the Income-tax Officer concerned and obtain from him a certificate authorising the person responsible for paying the income by way of insurance commission to deduct tax at such lower rates or deduct no tax, as may be appropriate to his case. Such certificate will be valid for the period spe....