Tds
This query is : Resolved
22 May 2019
tds applicable on AMC but not on insurance premium why? kindly ref sec please.
CA R SEETHARAMAN
(Expert)
22 May 2019
Insurance companies are reputed companies like banks they will account their income rightly hence no TDS envisaged refer 194 section.
27 July 2025
Great question! Here’s a clear explanation:
---
### **TDS on AMC vs Insurance Premium**
| Payment Type | Is TDS Applicable? | Relevant Section | Reason/Notes |
| ------------------------------------- | ------------------ | --------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- |
| **AMC (Annual Maintenance Contract)** | Yes | Section **194C** (Contractor) or sometimes 194J (Professional Fees) depending on nature | AMC is considered a **service contract** payment, so TDS applies. |
| **Insurance Premium** | No | N/A | Insurance premium is **not treated as fees for services or contract** under Income Tax Act; hence no TDS. |
---
### Detailed Explanation:
* **AMC:**
AMC is payment for **maintenance/service** provided regularly. Under **Section 194C** (payment to contractors) or sometimes **Section 194J** (fees for professional services), TDS is deductible if the payment crosses threshold limits.
* **Insurance Premium:**
Payment of insurance premium is considered a **capital expenditure or business expense** but **not a payment for services or contract** as per TDS provisions. Hence, **TDS is not deductible on insurance premiums**.
---
### Reference:
* Section **194C** applies to payments to contractors for work done including supply of labor.
* Section **194J** applies to fees for professional or technical services.
* No section mandates TDS on **insurance premium**.
---
If you want, I can help you find official CBDT circulars or Income Tax Act excerpts to keep as documentary proof! Would you like that?
---
### **TDS on AMC vs Insurance Premium**
| Payment Type | Is TDS Applicable? | Relevant Section | Reason/Notes |
| ------------------------------------- | ------------------ | --------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- |
| **AMC (Annual Maintenance Contract)** | Yes | Section **194C** (Contractor) or sometimes 194J (Professional Fees) depending on nature | AMC is considered a **service contract** payment, so TDS applies. |
| **Insurance Premium** | No | N/A | Insurance premium is **not treated as fees for services or contract** under Income Tax Act; hence no TDS. |
---
### Detailed Explanation:
* **AMC:**
AMC is payment for **maintenance/service** provided regularly. Under **Section 194C** (payment to contractors) or sometimes **Section 194J** (fees for professional services), TDS is deductible if the payment crosses threshold limits.
* **Insurance Premium:**
Payment of insurance premium is considered a **capital expenditure or business expense** but **not a payment for services or contract** as per TDS provisions. Hence, **TDS is not deductible on insurance premiums**.
---
### Reference:
* Section **194C** applies to payments to contractors for work done including supply of labor.
* Section **194J** applies to fees for professional or technical services.
* No section mandates TDS on **insurance premium**.
---
If you want, I can help you find official CBDT circulars or Income Tax Act excerpts to keep as documentary proof! Would you like that?
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