Section 194D TDS explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 194D covers TDS on Insurance commission. This guide explains its rate, threshold and applicability.
Section 194D — rate, threshold & applicability
| Section | 194D |
| Nature of payment | Insurance commission |
| TDS rate | 2% (5% earlier) |
| Threshold limit | ₹20,000 in a year |
| Who deducts | Insurers paying commission to agents |
| Rate if PAN not furnished | Generally 20% (or the applicable higher rate) |
When Section 194D applies
- It applies to Insurance commission
- TDS must be deducted once the payment crosses ₹20,000 in a year
- The deductor is: Insurers paying commission to agents
- A higher rate applies if PAN is not furnished by the payee
Example
An insurer paying ₹50,000 commission deducts 2% TDS.
Points to note
- TDS is deducted at the time of credit or payment, whichever is earlier
- A higher rate applies if the payee has not furnished a PAN
- Non-filers may attract a higher rate under Sections 206AB/206CCA
- Always verify the latest rate, as thresholds are periodically revised
TDS compliance essentials
Whichever section applies, the core TDS process is the same:
- Obtain a TAN before deducting any TDS
- Deduct at the correct rate at the time of credit or payment, whichever is earlier
- Deposit the TDS by the 7th of the next month using the right challan
- File quarterly TDS returns (24Q/26Q/27Q) and issue Form 16/16A to the payee
- Verify deductions in Form 26AS/AIS and reconcile before filing
Related Section 194D guides
- How to Deduct TDS under Section 194D
- Section 194D TDS with Example & Due Dates
- Section 194D TDS Rate Chart
TDS compliance under Section 194D, done right
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