Deduction of income-tax at source--Section 194D of the Income-tax Act, 1961--Deduction from insurance commission, etc.--Financial year 1978-79

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....duction of income-tax at source--Section 194D of the Income-tax Act, 1961--Deduction from insurance commission, etc.--Financial year 1978-79. I am directed to invite a reference to this department's circular No. 227 [F.No. 275/20/77-IT(B)] dated 14-7-77* 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. The rates for deduction of tax at source for the financial year 1978-79 proposed to be specified in Part II of the Schedule to the Finance Bill, 1978, a....

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....f tax at source from payments of income by way of insurance commission may be made during the financial year 1978-79 on payments made after 31-3-78 according to the above rates. In case any changes in the rates proposed in the Finance Bill, 1978, are made by Parliament, suitable instructions will be sent to you. 5. The substance of the main provisions in 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 remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to continuance, renewal or revivi....

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....provided for that purpose. (vi) In view of the existing provisions in section 288B of the Income-tax Act, 1961, the amount of tax to be deducted at source should be rounded off to the nearest rupee by ignoring amounts less than 50 paise and increasing the amounts of 50 paise or more to one rupee. (vii) 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. (viii) It will be open to the recipient of the commission to make an application in Form No. 13D to the Income-tax Officer co....