Circular No. 271

Instructions for deduction of tax at source from insurance commission during financial year 1980-81 at the rates specified in Part II of First Schedule to the Finance (No. 2) Bill, 1980

What this is

Circular No. 271 was issued by the Central Board of Direct Taxes on 26 May 1980. Its subject is Instructions for deduction of tax at source from insurance commission during financial year 1980-81 at the rates specified in Part II of First Schedule to the Finance (No. 2) Bill, 1980.

What it does

Tells deductors that the Finance Act, 1980 prescribes the same rates for deduction from insurance commission for financial year 1980-81 as were in force for 1979-80, so tax may continue to be deducted at the rates in Part II of the First Schedule to the Finance Act, 1979. It follows Circular No. 254 dated 23-5-1979, which had communicated the rates for the previous year.

Why it was issued

The routine yearly communication of the rates for deduction from insurance commission, there being no change for the year.

Who it reaches

Insurers paying commission to agents
Insurance agents whose commission bears deduction at source
Disbursing officers of insurance offices

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Instructions for deduction of tax at source from insurance commission during financial year 1980-81 at the rates specified in Part II of First Schedule to the Finance (No. 2) Bill, 1980

1. I am directed to invite a reference to this Department’s Circular No. 254 [F. No. 275/28/79-IT(B)], dated 23-5-1979 on the subject of deduction of income-tax from insurance commission, etc., during the financial year 1979-80.
2. The Finance Act, 1980 prescribes the same rates for deduction of tax from insurance commission, etc., during the financial year 1980-81 as were in force during the financial year 1979-80. Hence, tax at source from insurance commission, etc., may continue to be deducted at the same rates as are given in Part II of the First Schedule to the Finance Act, 1979.

Circular : No. 271 [F. No. 275/18/80-IT(B)], dated 26-5-1980.

What to watch

Its whole content is that the rates did not change - it fixes nothing of its own, and the rates it points to are those of the Finance Act, 1979.
The rates speak only for financial year 1980-81.
The heading refers to Part II of the First Schedule to the Finance (No. 2) Bill, 1980 while the body directs the use of the Finance Act, 1979 rates as continued by the Finance Act, 1980; read the body.

Where you meet it

In old TDS records of an insurer on agents' commission for that year.

← Circular No. 272 · Circular No. 270 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.