TDS for Insurance Commission reduced

TDS (Tax Deduction at Source ) for Insurance Commission has been reduced to 3.75% from the existing 5% as per the latest changes announced by The Finance Minister on 13th May 2020. In her press conference she said that the rates of TDS for non-salaried specified payments made to residents will be reduced by 25 percent, which will provide more funds at the disposal of individuals and companies.

At the same time the TDS for Payment in respect of life insurance policy to the policyholders has also been reduced to 3.75% from 5% which was deducted earlier. The Survival benefits or Maturity which are nor exempt under Section 10(10D) of the Income Tax Act and the investments which are not considered under Section 80C would attract the above-said deduction of TDS at source from the maturity value.

The reduced TDS rates will be valid until 31st March 2021 and would benefit a large number of LIC Agents or the Insurance agents as a whole by leaving more money in their hands of the LIC Agents during the financial year and help them to cope up with the adverse situation caused by the pandemic.

The lower rates of TDS will also help those who usually get tax refunds at the end of the year as a result of higher TDS deducted during the financial year.

Along with the TDS for Insurance commission, TDS on other avenues like Payment in respect of life insurance policy, Interest on Securities, Dividend, Interest other than interest on securities, Payments in respect of deposits under National Savings Scheme, Payment of dividend by Mutual Funds and many more as per the table below has been reduced to a great extent providing a relief for the individual taxpayers.

The press release reads:– In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021

S. No	Section of the Income- tax Act	Nature of Payment	Existing Rate of TDS	Reduced rate from 14/05/2020 to 31/03/2021
1	193	Interest on Securities	10%	7.5%
2	194	Dividend	10%	7.5%
3	194A	Interest other than interest on securities	10%	7.5%
4	194C	Payment of Contractors and sub-contractors	1% (individual/HUF) 2% (others)	0.75% (individual/HUF) 1.5% (others)
5	194D	Insurance Commission	5%	3.75%
6	194DA	Payment in respect of life insurance policy	5%	3.75%
7	194EE	Payments in respect of deposits under National Savings Scheme	10%	7.5%
8	194F	Payments on account of re-purchase of Units by Mutual Funds or UTI	20%	15%
9	194G	Commission, prize etc., on sale of lottery tickets	5%	3.75%
10	194H	Commission or brokerage	5%	3.75%

11	194-I(a)	Rent for plant and machinery	2%	1.5%
12	194-I(b)	Rent for immovable property	10%	7.5%
13	194-IA	Payment for acquisition of immovable property	1%	0.75%
14	194-IB	Payment of rent by individual or HUF	5%	3.75%
15	194-IC	Payment for Joint Development Agreements	10%	7.5%
16	194J	Fee for Professional or Technical Services (FTS), Royalty, etc.	2% (FTS, certain royalties, call centre) 10% (others)	1.5% (FTS, certain royalties, call centre)        7.5% (others)
17	194K	Payment of dividend by Mutual Funds	10%	7.5%
18	194LA	Payment of Compensation on acquisition of immovable property	10%	7.5%
19	194LBA(1)	Payment of income by Business trust	10%	7.5%
20	194LBB(i)	Payment of income by In- vestment fund	10%	7.5%
21	194LBC(1)	Income by securitisation trust	25% (Individual/HUF) 30% (Others)	18.75% (Individual/HUF) 22.5% (Others)
22	194M	Payment to commission, brokerage etc. by Individual and HUF	5%	3.75%
23	194-O	TDS on e-commerce participants	1% (w.e.f. 1.10.2020)	0.75%