Saving tds

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JKS (Querist)

13 September 2012 Hello & Good morning to all. Please solve my query as mentioned below:
How to save on creation of TDS liability by a corporate entity in case of payments or credit in account of insurance agents/ financial products agents or in case of land broking agents?
Thanks to all in anticipation.

CA Ayush Agarwal

CA Ayush Agarwal (Expert)

13 September 2012 That is Not Expenditure of Corporate.
That Payment is Made Only After Deducting from Payment to Ins Agents.

JKS

JKS (Querist)

13 September 2012 Thanks a lot Ayush for your support. I fully agree that it is not an expenditure of corporate, but my query is essentially to know about what are the ways by which liability of deducting TDS may not arise while making payments to Ins agents/ Fin. Product Agents or land broking agents, in cases where the payer is a corporate.
Thanks to all & I'm waiting urgently for advice on this forum. Thanks again.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

23 July 2025 Hey! On your question about **saving/deducting TDS liability for payments to insurance agents, financial product agents, or land broking agents** by a corporate, here’s the lowdown:

### Key points:

* When a corporate pays commissions or fees to such agents, **TDS under section 194H (Commission or brokerage)** is generally applicable.
* **The corporate deducts TDS before payment** and deposits with the government.

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### Ways to reduce or avoid TDS liability legally:

1. **Check threshold limits:**
TDS is required only if payment exceeds ₹15,000 in a financial year per deductee. If payments are under this limit, no TDS is required.

2. **Verify PAN of agents:**
Ensure agents provide valid PAN. If PAN is missing, TDS rate goes up to 20%, so having PAN reduces tax burden but does not avoid TDS.

3. **Payments classified differently:**
If payment is NOT commission/brokerage but salary or contract payment, different TDS provisions apply. But for agents, mostly 194H applies.

4. **Payments to agents registered under GST:**
If agents are registered under GST and issue proper GST invoices, you are supposed to deduct TDS on commission portion only. Make sure GST compliances are proper.

5. **Obtain declaration under Form 15G/15H (if applicable):**
Not applicable for commission payments generally, mostly for interest income.

6. **Structuring payments:**
Splitting payments into smaller amounts under ₹15,000 to avoid TDS can be risky and may attract penalty if done just to evade TDS.

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### Important:

**There is no legal way to avoid deducting TDS on commission payments if threshold exceeded.**
TDS is deducted and adjusted by agents in their tax returns later.

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**Bottom line:** The corporate must deduct TDS on commission payments to agents if they exceed threshold and deposit it timely. Avoidance is not advisable and can lead to penalty.

If you want, I can help with compliance or alternative structuring tips. Let me know!

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