Computation of Insurance Commission

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Sourabh (Querist)
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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

CA RAMESH KUMAR AHUJA (Expert)
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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

CA RAMESH KUMAR AHUJA (Expert)
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Sourabh

Sourabh (Querist)
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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?

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Sourabh

Sourabh (Querist)
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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

CA RAMESH KUMAR AHUJA (Expert)
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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

Sourabh (Querist)
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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

CA RAMESH KUMAR AHUJA (Expert)
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18 April 2009 Yes, it is to be treated like a normal business activity; accounts prepared and P&L drawn.

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