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Computation of Insurance Commission (Income Tax)

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This query is : Resolved


( Author )
16 April 2009

Under Section 44 of income tax act, how is the computation of income from insurance commission is done.

In first year.
for renewal income &
for bonus commission.



CA RAMESH KUMAR AHUJA

( Expert )
17 April 2009

The income from insurance commission falls under the head "Income from business or profession " .

CBDT vide its circular no 648 dt 30/3/1993 has allowed ad-hoc deduction to those having gross receipt of commission below Rs 60,000.
As per the circular
How much deduction if commission is less than Rs 60,000 in a year?

1. In case of LIC Agents

First Year Commission Ad Hoc Deduction 50 % of first year deduction. maximum Rs 20,000
Renewal Commission 15 % of renewal commission ,maximum Rs 20,000
1st Yr + Renewal Commission (If separate figures are not available) 33.33 % of gross receipt.
Bonus Commission NIL


CA RAMESH KUMAR AHUJA

( Expert )
17 April 2009

The income from insurance commission falls under the head "Income from business or profession " .

CBDT vide its circular no 648 dt 30/3/1993 has allowed ad-hoc deduction to those having gross receipt of commission below Rs 60,000.
As per the circular
How much deduction if commission is less than Rs 60,000 in a year?

1. In case of LIC Agents

First Year Commission Ad Hoc Deduction 50 % of first year deduction. maximum Rs 20,000
Renewal Commission 15 % of renewal commission ,maximum Rs 20,000
1st Yr + Renewal Commission (If separate figures are not available) 33.33 % of gross receipt.
Bonus Commission NIL


Sourabh

( Author )
17 April 2009

If someone is having income of 1,10,000 form LIC as isurance commission than his/her income will be fully taxable?


Sourabh

( Author )
17 April 2009

If someone is having income of 1,10,000 form LIC as isurance commission than his/her income will be fully taxable?


CA RAMESH KUMAR AHUJA

( Expert )
17 April 2009

In that case, the assessee will claim expenses on actual basis subject to the maintenace of accounts and vouchers which may be substantiated as an when called for to do so by the AO.


Sourabh

( Author )
17 April 2009

it means that it will be than treated as a normal business, where exoenses ill claimed and commission will be income/revenue?


CA RAMESH KUMAR AHUJA

( Expert )
18 April 2009

Yes, it is to be treated like a normal business activity; accounts prepared and P&L drawn.


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