Budget 2017 came as a great relief for Insurance Agents, in case their taxable income is less than Rs2.5 Lakhs. This is because now TDS will not be deducted from their insurance commission income.
This amendment will be effective from 1st June, 2017.
To avail this benefit, Agent is required to furnish Form 15G and Form 15H with their respective insurance companies. Form 15G /15H is basically the self-declaration by the person that tax on his estimated total income for the financial year would be nil. Form 15G is used by the person less than 60 yrs while the Form 15 H is meant for senior citizens (Persons above 60 yrs).
Before Budget 2017, Insurance commission was subject to TDS @ 5% beyond a limit of Rs 15,000 per financial year even if the income of the agent is below the taxable limit. To claim the refund of TDS, agents need to file the income tax return. Therefore, in order to reduce the compliance burden for the insurance agents whose income is below the taxable limit, they are now allowed to furnish self-declaration in form 15G/15H for non-deduction of TDS in respect of insurance commission earned.
In Budget 2016, the government reduced the TDS on insurance commission from 10% to 5%. And Now in Budget 2017, government has allowed the filing of self-declaration in Form 15G/15H for non-deduction of TDS on insurance commission. The government has reduced the compliance procedures for small insurance agents. This move is likely to attract more agents to the insurance industry.
To understand how to calculate income tax for an insurance agent, more reading here.