Salary and commission income

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manoj (Querist)
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14 November 2013 My client has salary income also insurance commission. TDS is deducted u/s 194 D PLZ tell me which ITR Will be applicable. Also tell me under which head insurance commission can be disclosed. Income from business or income from other source.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 November 2013 You need to file ITR -4
Insurance commission need to show under Business income

manoj

manoj (Querist)
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14 November 2013 SIR BUT HE IS A SALARIED PERSON AND SALARIED PERSON CANT DO BUSINESS

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 November 2013 Salaried person also can do the business. no such restrictions

manoj

manoj (Querist)
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14 November 2013 SIR WHY DONT I PLACE THIS INCOME IN INCOME FROM OTHER SOURCE

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 November 2013 Insurance commission covered under business income. so it can be shown there only

manoj

manoj (Querist)
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14 November 2013 IN WHICH SECTION CAN YOU CLARIFY PLEASE

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 November 2013 Circular No. 648, Dated March 30, 1993, states that:
Commission earned by insurance agents of Life Insurance Corporation - Allowance of expenditure.
The Board in F.No. 14/9/65-ITA-I, September 22, 1965, as subsequently modified in InstructionNo. 1546 dated January 6, 1984, had granted, subject to conditions therein specified, the benefit of ad hoc deduction in respect of the expenses incurred by agents of the Life Insurance Corporation.
In supersession of the above circular and instruction; the Board has decided that the benefit of ad hoc deduction to insurance agents of Life Insurance Corporation having total commission (including first year commission, renewal commission and bonus commission) of less that Rs 60,000 for the year, and not maintaining detailed accounts for the expenses incurred by them, may be allowed as follows:
(i) where separate figures of first year and renewal commission are available, 50 per cent of the first year commission and 15 per cent of the renewal commission; (ii) where separate figures as above are not available, 33-1/3 per cent of the gross commission.;
In both the cases, the ad hoc deduction will be subject to a ceiling limit of Rs 20,000.
The "gross commission" in (ii) above will include the first yearas well as the renewal commission but will exclude bonus commission.
The complete amount of bonus commission is taxable and will be taken into account for purposes of computing the total income, and no ad hoc deduction will be allowed from this amount.
The benefits of ad hoc deduction will not be available to agents who have earned total commission of more that Rs 60,000 during the year. The admissibility of the expenditure claimed by such agents will be decided by the Assessing Officers as per the provisions of the Income-tax Act.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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14 November 2013 Dear Manoj,

Remember a simple rule. Income is placed in "other sources" only if the same is not covered under any other head. And follow Ramesh ji's advice.

manoj

manoj (Querist)
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16 November 2013 Where the earning of an individual is only from commission of insurance (full-time agent), then ITR-4 can be used. Here, the main source of income is salary (full-time), and side income is from selling insurance products. Besides, section 57 about ad hoc deduction is applicable for income from other sources. One cannot claim expenditure in business as well as ad hoc deduction at the same time.
sir plz help

Nikhil Kaushik

Nikhil Kaushik (Expert)
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16 November 2013 it doesn't matter what your main source. even a single transaction can construe business income. Please note that income from other sources apply only where a particular income is not covered under any other section.

plus, who told you that you cannot claim expenditure???? where did that knowledge came from. You can claim expenditure in both as well as income from other courses.

In your case, the said income shall be computed in business income. there is adhoc nature here. Insurance agency is a planned activity, wherein you take license in order to sell insurance policies for commission income.

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