What is TDS 194DA?

What is TDS 194DA?

The rate of tax u/s 194DA is 5% (3.75% w.e.f. 14.05. 2020 to 31.03. 2021) on “only Income Part” of the payment made under LIP. [Applicable from September 1, 2019] (That is after deducting the amount of insurance premiums paid by the insured person from the total sum received from Insurance Company).

What is the TDS percentage for insurance commission?

Therefore, the tax will be deducted at the source at the basic rates mentioned above. The rate of TDS will be 20% in cases where the deductee has not quoted PAN….What is the rate of TDS under Section 194D.

Details Rate of TDS
Persons other than a company 5%
Domestic Company 10%

Is TDS deductible on insurance premium?

The rate of tax deducted at source (TDS) on life insurance policies where maturity proceeds are taxable has been halved from 2% to 1%. Under section 194DA, TDS is applicable on all taxable payments made to them if the total amount exceeds Rs 1 lakh.

Is life insurance policy maturity amount taxable?

Therefore, the insurance maturity proceeds are taxable, and not entitled to exemption under section 10(10D) of the Income Tax Act. Since the maturity payment is above Rs 1 lakh, the insurance company is liable to deduct tax on the maturity proceeds.

Is LIC maturity amount tax free?

Is the maturity amount fully taxable? As per the Income Tax Act, any sum received under a life insurance policy is exempt from tax if premium payable for any of the years during the term of the policy is less than 10% of the capital sum assured.

What does section 194da of the Income Tax Act mean?

Section 194DA of the Income Tax Act contains guidelines for the calculation, exemption, and collection of TDS for insurance commissions and premium payments.

How does SEC 194da apply to life insurance?

We recommend you consult a tax professional before you act on this or related matters. This is in continuation with the previous article on how introduction of Sec 194DA has enforced insurance companies to cut TDS on Life Insurance policies which are not compliant with Sec 10 (10 (d)) and whose income exceeds 1 lakh in a financial year.

How much TDS can I claim under section 194da?

It is important to note that section 194DA includes the sum allocated by way of bonus. The Deductor, liable to deduct TDS as per provisions of section 194DA of the Income Tax Act, 1961, is required to deduct TDS @ 1%.