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Taxability of insurance commission

B V Ravi Chandra (Student CA Final ) (36 Points)

28 July 2015

Hey guys, my uncle is an agent in max life insurance. He has got some insurance commission during the year. I came to know that there is some adhoc deduction available to life insurance agents, is it available only to agents of LIC or even other private players like Max life? If adhoc deduction is not available what expenses can I book??

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Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 28 July 2015

Adhoc deduction is available for insurance commission agents earning commission upto Rs. 60000 per annum. Above that they are supposed to maintain books of accounts if receipts exceed 120000/- or income is above taxable limit. You can keep proper account of expenses like travelling, conveyance, telephone expenses, entertainment and cleint relationship expenses etc., which are incurred as part of the insurance canvassing activity. Depreciation of vehicles, computers etc can also be claimed if these are used for the activity

B V Ravi Chandra (Student CA Final ) (36 Points)
Replied 28 July 2015

I know that adhoc deduction is available, my question is whether is it available to agents of private companies other then LIC??

CA Chandra Prakash (9873059766 Increasing knowledge through sharing) (296 Points)
Replied 28 July 2015

Yes, if u have opportunities to earn more income by way of commission then u must to go. In such case ur income will be treated as normal business income and no adhoc deduction is allowed rather all actual expenses incurred are allowed.

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 28 July 2015

IT act does not discriminate between LIC and other private insurance companies in this regard

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CMA Poornima Madhava (CMA) (13097 Points)
Replied 28 July 2015

If the aggregate commission does not exceed Rs.60000, ad hoc deduction can be claimed as follows:

LIC agents

50% of I year commission, 15% of renewal commission (if separate figures for I year and renewal commission are not available, then 33%) subject to a maximum of Rs.20000
No deduction for bonus commission

UTI/PO/Govt securities/notified mutual fund agents

50% of commission