Deduction of income-tax at source-Section 194D of the Income-tax Act, 1961-Deduction from insurance commission, etc.-Rates of tax applicable during the financial year 1984-85

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....ect Taxes. 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.-Rates of tax applicable during the financial year 1984-85. I am directed to invite a reference to this Department's Circular No. 361 (F. No. 275/25/83-IT-B), dated the 10th June, 1983 (printed at [1983] 142 ITR (St.) 89), wherein the rates at which the deduction of income-tax was to be made during the financial year 1983-84, from payments of income by way of insurance commission under section 194D of the Income-tax Act, 1....

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....the total income of such person, whichever is higher. In the case of a company which is not a domestic company, tax on insurance commission is to be deducted at the rate of 73.5% (income-tax 70% plus surcharge 3.5%). 3. 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 purposes of deduction of tax at source "insurance commission" will mean an 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 reviving of policies of insurance). (ii) Deduction will be made at the time of the credit of the income t....

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....t that the appropriate challan form is used for making the payments. Where the payment of tax includes any surcharge, it should be shown separately is the challan, in the space provided for that purpose. (v) The amount of tax to be deducted at source should be rounded off to the nearest rupee ignoring amount less than 50 paise and increasing the amount of 50 paise or more to one rupee, as required under section 288B of the Act. (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 a....