TDS applicability
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
Let’s clarify this step-by-step:
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## ✅ **Short Answer:**
Yes, **TDS under Section 194D is applicable**, even if the payment is made to **SBI**, **unless specifically exempt** by notification — which SBI generally **is not**.
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## 🔍 Background:
### 📘 **Section 194D – TDS on Insurance Commission**
> TDS under Section **194D** applies to any person responsible for paying to a resident **any remuneration/reward (whether by way of commission or otherwise)** for soliciting or procuring insurance business.
* Applicable to **insurance companies** making payment
* TDS rate (as of FY 2010-11): **10%** (individuals)/**10%** (companies)
---
## 🏦 **Status of SBI:**
SBI is:
* A **public sector bank**, and
* A **government-owned statutory corporation**, but
* **Not exempt** from TDS under Section 194D by default.
So unless there is a **specific notification** issued under **Section 197A** or any **CBDT circular** **exempting SBI** from TDS under 194D, **TDS will apply**.
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## 📌 Case: **Commission Paid by Insurance Co. to SBI (Bancassurance)**
* In bancassurance, SBI **acts as a corporate agent** for life/general insurance companies.
* The **insurance company pays commission** to SBI for business solicited.
* This payment is clearly in the **scope of Section 194D**.
👉 **TDS must be deducted** by the **insurance company** at the time of payment or credit.
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## 🧾 Supporting Case Law / References:
There’s **no CBDT notification** (as of 2010 or earlier) that exempts SBI from TDS under Section 194D.
However, in some cases, **SBI or PSU banks may request a Nil/Lower Deduction Certificate under Section 197** from the AO — but **that is case-specific** and doesn't mean blanket exemption.
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## ✅ Final Conclusion:
| Parameter | Answer |
| -------------------------------------------------------------------- | ------------------------- |
| Is SBI exempt from TDS under Section 194D? | ❌ No general exemption |
| Is commission paid to SBI for insurance business covered under 194D? | ✅ Yes |
| Should the insurance company deduct TDS on this commission? | ✅ Yes, under Section 194D |
| Can SBI apply for lower/Nil deduction? | ✅ Yes, under Section 197 |
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Let me know if you want the latest position (post-GST and post-2017 amendments), or if you're dealing with **LIC**, **IRDAI** circulars, or **TDS return disclosure formats** for such payments.
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