Tds on brokerage on insurance business

This query is : Resolved

Shubha Salian (Querist)
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05 September 2023 Ours is an insurance company. We pay brokerage to the Insurance brokers. The brokerage is generated on the last day of the month and TDS on the same @ 10% is remitted to the IT dept. before 7th of the next month. However, Invoices for the payment is raised by the Brokers subsequently.

In the specific case, we had already remitted TDS on brokerage for the months of June & July 2023 at the specified rate. However, now brokers have raised their bill for the month of June & July 2023 after obtaining Lower deduction certificate effective from 25th August. 2023 to 31st March 2024 and requested us to adjust the lower deduction rate of 4% against their bill for the months of June & July 2023.

As per our practice TDS becomes payable on accrual or payment whichever is earlier. Accordingly, we had remitted TDS @ 10% for the month of June & July, 2023. As the validity date of the Lower deduction certificate is 25th August 2023 to 31st March 2024 is it possible to adjust the lower deduction rate for the Invoices for the month of June & July 2023 which was raised after issue of Lower deduction certificate.

Please guide.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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21 January 2024 The LDC should be applied only from the date of issuance of such certificate from the IT dept up to the total amount mentioned. The lower deduction will be made the date of accounting of such invoices or payments wherever is earlier from the date of issuance of such certificate.

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