Deduction from Commission received from LIC

Save Share

This query is : Resolved

Quick Summary

LIC agents can claim deductions on their commission income for tax purposes. A 50% deduction is available for first-year commission and 15% for renewal commission, with a maximum overall deduction of Rs. 20,000. If commission amounts aren't itemised, one-third of the gross commission can be deducted, also capped at Rs. 20,000. These deductions apply only if total commission income is below Rs. 60,000 annually.

Vishwa Bandhu Nigam

Vishwa Bandhu Nigam (Querist)
Follow

16 August 2020 Please help me, How much deduction is available to a LIC Agent commission received from LIC , for the purposes of computation of taxable income ?

CA KARAN SINGH

CA KARAN SINGH (Expert)
Follow

17 August 2020 Dear Vishwa Bandhu Ji, If you earn a first-year commission, you will get a deduction of 50% of the first-year commission amount. If it is a renewal commission then, it will be 15% of the renewal commission amount. But remember the maximum deduction allowed can not be more than Rs. 20,000.

Also, If the commission amount is not separately known then, 1/3 of the gross commission amount will be allowed as deduction (Maximum limit of Rs. 20,000 is applicable here also).

REMEMBER ALL THIS DEDUCTION WILL BE AVAILABLE ONLY IF TOTAL COMMISSION INCOME IS LESS THAT RS. 60,000 IN A YEAR

CA Raj Doshi

CA Raj Doshi (Expert)
Follow

17 August 2020 In case you maintain books of accounts, then all expenses incurred to earn commission income shall be deductible on actual basis.

c.bakshi

c.bakshi (Expert)
Follow

17 August 2020 however, you can also file return on presumptive basis u/s 44ada

CA KARAN SINGH

CA KARAN SINGH (Expert)
Follow

17 August 2020 How can a person earning income in the nature of the commission declare its income on a presumptive basis?
Sec 44AD(6) specifically excludes commission income to be declared on a presumptive basis. Also, Sec 44ADA applies on professional, and commission income is not a professional income.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now