In recent years, the number of insurance agents in India has increased significantly. This growth has led to a rise in queries about income tax return filing and TDS deduction among insurance agents.

Here in this blog, we will explore the process of filing income tax returns for an insurance agent.

Which ITR to file for Insurance Commission Income?

  • ITR-3: Applicable to individuals earning commission-based income from a business.
  • ITR-4: This form applies to individuals making both a fixed salary and a passive income. They can file ITR 4 under the presumptive taxation scheme under Section 44AD.

Who will deduct TDS?

An entity is required to deduct TDS under section 194D when paying commission to an Indian resident for:

  • Soliciting or procuring insurance business.
  • Renewing, reviving, or continuing policies.

The Rate at which TDS is deducted

Type of Recipient

Rate of TDS

For homemaker

5%

Company

10%

When is the TDS deduction not applicable for insurance commission income?

An entity shall not deduct TDS if:

  • The commission earned is less than INR 15,000.
  • If an agent submits form 15G or 15H declaring no tax liability, TDS will not be deductible. This applies only if the total income is less than INR 2,50,000, the basic exemption limit, and he is a senior citizen.

How to Calculate Income Tax for an Insurance Agent?

Suppose an insurance agent, XYZ’s  total income from a salary

45,000 x 10 = 4,50,000 - 50,000 (Standard Deduction) = 4,00,000

Gross total income for XYZ 

4,39,500

Deductions after total taxable income under section 80C for XYZ

 36,000 (EPF) +  50,000 (PPF) = Rs 86,000

Taxable Amount

 4,39,500 –  86,000 = Rs 3,53,500

How to File an Income Tax Return?

  • Visit the Income Tax Portal: https://www.incometax.gov.in.
  • Log In: Use your PAN and password.
  • Select ITR-3 and share the details such as your PAN, address, and bank account information.
  • Fill in business details including income from commission, professional expenses, and other relevant information like TDS details.
  • Verify the return using Aadhaar OTP, net banking, or sending a signed ITR-V to CPC, Bengaluru.

Bottom Line

Filing your ITR helps you avoid penalties and lays the groundwork for a more financially secure future. Take control of your financial journey today—file your returns on time and establish a foundation for a brighter tomorrow!

FAQs on ITR for an Insurance Agent 

1. Which ITR should an insurance agent file?

Insurance agents earning income through commission are required to file their returns using ITR-3.

2. How Do LIC Agents File Their Income Tax Returns?

LIC agents have to file income tax return 3. It is specifically applicable for reporting commission income. As LIC agents are not eligible for the presumptive taxation scheme, they cannot file ITR-4.

3. Can I deduct expenses from commission income?

Yes, you can deduct all your expenses from your commission income when you file your income tax return.

4. What is the TDS on Commission Paid to Insurance Agents?

The TDS rate on commission paid to insurance agents varies based on the recipient’s status. The current rates are:

  • 10% for domestic companies
  • 5% for other resident individuals
5. What is the Income Tax Rate for the LIC Agent Commission?

If the LIC agent does not provide their PAN, the TDS rate on commission income is 20%. Additional provisions apply if the TDS amount exceeds ₹50,000 in the last two financial years.