TDS needs to be deducted on payment of insurance commission.
1. Time of Deduction- TDS to be deducted at the time of payment or credit, whichever is earlier.
2. Deductor- Any person who makes a payment in the form of remuneration or reward as part of the insurance business should deduct tax.
3. Deductee- The payment of interest should be made to a resident. If payment is made to a non-resident, TDS shall be deducted under section 195.
4. Tax Deduction Rate & Threshold Limit: Latest Update – As per the Budget 2024 update, effective from 1st April 2025, the rate of TDS on Insurance Commission has been reduced from 5% to 2% for individuals & threshold limit has been increased. The updated TDS rate & Threshold limit are as follows:
| Period | TDS Rate | Threshold Limit |
| Before 01/04/2025 | 5% (For Individuals) | ₹ 15,000 |
| On or after 01/04/2025 | 2% (For Individuals) | ₹ 20,000 |
| 10% (For Domestic Company) | ₹ 20,000 |
If PAN is not furnished, then tax to be deducted at a higher rate.
5. Nature of Income: Remuneration/ rewards, by the way of commission or for the following purposes:
- Soliciting or obtaining insurance business
- Continuance, renewal or revival of policies of insurance
6. Cases when TDS shall not be deducted- If Form 15G/15H submitted