There is something to cheer for insurance intermediaries in the Budget 2017. The Budget 2017 has proposed to exempt insurance agents having annual income of up to Rs.2.50 lakh from paying tax deducted at source (TDS).
Such agents are required to submit a self-declaration form to their respective insurance companies. According to income tax norms, agents can approach the income tax authority for nil TDS or lower deduction of TDS from their commission income through ‘form 13’ under Section 197. The certificate will be issued to distributors if the assessing officer is satisfied with the request. To avail this benefit, agents have to submit this certificate to the insurers.
In his budget speech, Union Finance Minister Arun Jaitley has said, “As on today, a TDS of 5% is being deducted from commission payable to individual insurance agents even if the income of some of them may be below taxable limit. I propose to exempt them from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit.”
Currently, insurance companies deduct TDS of 5% on commission amount exceeding Rs.15,000. Agents can claim refund on this TDS based on their tax liability at the time of filing returns.
In Budget 2016, the government has reduced TDS on insurance commissions from 10% to 5%.
Insurance agents have welcomed this move and believed that it will attract more agents to the insurance industry.
As on June 2016, there are close to 19.88 lakh agents in the life insurance industry.
