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will tds on profit commission pais by reinsurance co. to insurance company be applicable us 194D?
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Originally posted by : KARAN MAINI CA FINAL STUDENT
will tds on profit commission pais by reinsurance co. to insurance company be applicable us 194D?

Refer General Insurance Corporation of India v. ACIT (TDS)

(See Extract No. 35)

Reinsurance not covered by section 194D:-

Reinsurance differs from insurance in a number of ways and the most important is that there is no contractual relationship between the direct insured and the reinsurer. There are separate contracts involved-one between the insured and the insurer and another between the insurer and reinsurer. insurer has to pay all valid claims to the insured, irrespective of whether the insurer can recover the same from his reinsurer.

when an reinsurance company gets business from insurance company at premium less"commision" the commision is not subject to tds u/s 194d as it is not payable to an agent for procuring insurance business. similarly when profit commision is payable by an reinsurance company to an insurance company, after the expiry of term of insurance, in respect of such cases where there is no claim during the operation of the reinsurance treaty, tds u/s 194d is not require-

General Insurance Corporation fo India v. CIT (2009) 28 SOT 453 (Mum).
 

Thank you Parv & Deepak


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