Income Tax

TDS on Insurance Commission: Section 194D Explained

CA Nikhil Gupta·June 2026·6 min readTDS

Reviewed by CA Nikhil Gupta · Last reviewed 17 June 2026

If you earn commission as an insurance agent - whether for life insurance, health insurance, or general insurance policies - that income is subject to TDS under Section 194D, with one of the lowest thresholds in the entire TDS framework: just Rs 15,000 a year. Here's how the deduction works, what rate applies, and how agents should report this income.

What Is Section 194D?

Section 194D requires any person paying commission or remuneration (by whatever name called) for soliciting or procuring insurance business - including commission paid for continuing, renewing, or revival of insurance policies - to deduct TDS at source. This primarily applies to insurance companies paying commission to their agents, but also covers other intermediaries involved in procuring insurance business.

TDS Rate and Threshold

Particulars	Detail
Threshold (no TDS below this amount in a financial year)	Rs 15,000
TDS rate for individuals/HUF (with valid PAN)	5%
TDS rate without PAN	20% (higher rate under Section 206AA)
Deductor	Insurance company or person paying the commission

Rs 15,000 is one of the lowest TDS thresholds. Compare this to, say, Section 194J (professional fees), where the threshold runs into tens of thousands. For insurance agents - many of whom earn modest commissions across multiple policies and renewal cycles - crossing Rs 15,000 in aggregate commission from a single insurer in a year is quite common, meaning TDS deduction kicks in for a large proportion of active agents.

What Counts as "Insurance Commission" Under 194D?

Commission on new policy sales (life, health, motor, fire, and other general insurance)
Renewal commission on policies that continue from year to year
Commission for revival of lapsed policies
Any bonus, incentive, or override commission structured as remuneration for procuring or servicing insurance business

How Insurance Agents Should Report This Income

Can Insurance Agents Use Presumptive Taxation?

The presumptive taxation schemes under Sections 44AD and 44ADA are generally available to eligible businesses and specified professionals respectively. Insurance agency is generally treated as a business activity (not one of the "specified professions" under 44ADA), so agents with eligible turnover may explore Section 44AD - though many agents with significant genuine business expenses may find that claiming actual expenses against actual income results in a more accurate (and sometimes lower) taxable income than the presumptive 8%/6% of turnover. The right choice depends on the agent's actual expense profile and overall income level - a Chartered Accountant can help evaluate this.

Claiming TDS Credit

Step	Action
1	Check Form 26AS / AIS to confirm the TDS deducted by each insurance company under Section 194D
2	Report gross commission income (before TDS) under the appropriate head in your ITR
3	Claim the TDS deducted as a credit against your total tax liability
4	If your total income is below the taxable threshold, submit Form 15G to avoid TDS deduction altogether (Form 15H is for senior citizens specifically)

Many agents mistakenly believe the TDS deducted IS their final tax liability and don't file a return. This is incorrect - TDS under 194D is only an advance collection mechanism. If your actual tax liability (after deducting eligible business expenses) is lower than the TDS deducted, you are entitled to a refund, but only if you file your ITR.

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Earning commission income and unsure how to declare it?Understand how presumptive taxation works for small businesses and professionals.

Presumptive Taxation Guide

Frequently Asked Questions

My total insurance commission from one insurer this year was Rs 12,000. Will TDS be deducted? ▼

No. Since the threshold under Section 194D is Rs 15,000 per financial year per deductor, and your commission from this insurer (Rs 12,000) is below this threshold, no TDS should be deducted on this amount. However, if you receive commission from multiple insurers, each insurer applies the Rs 15,000 threshold independently to payments made by them - so your aggregate commission across all insurers could still exceed Rs 15,000 even if no single insurer's payment does, and you'd still need to report the full amount as income even though no TDS was deducted.

I don't have a PAN registered with the insurance company. What TDS rate applies? ▼

If you don't provide your PAN to the insurance company, TDS under Section 194D would be deducted at a higher rate - 20% under Section 206AA - instead of the standard 5%. This is a significant difference (5% vs 20%), so insurance agents should ensure their PAN is correctly registered and updated with every insurance company they work with, to avoid this higher deduction and ensure the TDS is correctly reflected against their PAN in Form 26AS.

Can I claim a deduction for the petrol, mobile phone, and office expenses I incur while selling insurance policies? ▼

If your insurance commission income is reported under 'Profits and Gains of Business or Profession' (which is typical for independent agents) and you are not opting for presumptive taxation, you can generally claim legitimate business expenses actually incurred wholly and exclusively for earning this commission - such as travel/conveyance, mobile/communication costs, and office expenses - against your gross commission income, provided you maintain proper records/bills. This can significantly reduce your taxable income compared to the gross commission figure shown in Form 26AS. It's advisable to maintain a simple expense log and consult a Chartered Accountant on what's allowable and how to compute your net taxable income.

Source and review trail

Use the current official instrument, portal or regulator publication before acting.

Primary category: Income Tax
Official starting point: www.incometax.gov.in

Primary sources & related provisions

Statutory provisions referenced in this guide:

Section 393 (Tax to be deducted at source; earlier Section 195) - Income-tax Act