FINANCIAL YEAR 1973-74

1787. Instructions for deduction of tax at source from insurance commission during financial year 1973-74 at the rates specified in Part II of First Schedule to Finance Act, 1973

1. In partial modification of Ministry of Finance (Department of Revenue and Insurance) Circular No. 112 [F. No. 275/64/73-ITJ], dated 31-5-1973 it is hereby clarified that the provisions of section 194D inserted by the Finance Act, 1973, providing for deduction of income-tax at source from payments of income by way of insurance commission apply in relation to all such payments made to a resident whether individual, company or any other category of person. These provisions do not restrict the deduction of tax at source to insurance commission paid only to individuals.

2. The rates for deduction of tax at source for the financial year 1973-74, prescribed in Part II of the First Schedule to the Finance Act, 1973 are as below :

Income-tax
Surcharge
I.
In the case of a person other than a company
10 per cent
Nil;
II.
In the case of company—
(i)
where the company is a domestic company
22 per cent
1 per cent;
(ii)
where the company is not a domestic company
70 per cent
3.5 per cent.

3. Although there is no specific provision for deduction of tax at source from insurance commission paid to a non-resident, tax from such payments made to a non-resident, not being a company, or to a company which is neither an Indian company nor a company which has made the arrangements as prescribed by rule 27 for the declaration and payment of dividends within India, will have to be deducted under section 195 of the Income-tax Act. The rate of deduction of tax at source in the case of persons other than companies, as specified in item 1(b)( i) of Part II of the First Schedule to the Finance Act, 1973 is 34.5 per cent (income-tax 30 per cent plus surcharge 4.5 per cent) of the income by way of insurance commission or income-tax and surcharge thereon at the rates prescribed in Sub-Paragraph I of Paragraph A of Part III of the said First Schedule, if such income has been the total income of the recipient, whichever is higher. In the case of companies, the tax is to be deducted at the rate of 73.5 per cent (income-tax 70 per cent plus surcharge 3.5 per cent).

4. Necessary forms for use in regard to deduction of tax at source from insurance commission have since been prescribed under the Rules, as amended w.e.f. July 15, 1973 vide Notification No. SO 369(E), dated 2-7-1973.

5. Applications for certificate for deduction of tax at lower rate [Form Nos. 13D and 15D], the certificates of deduction of tax [Form No. 19D] and returns in regard to tax deducted at source [Form Nos. 26D, 26E, 26F] should now be filed in these forms.

Circular : No. 121 [F. No. 275/64/73-ITJ], dated 8-10-1973

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