Circular No. 300

What it does

Continues the existing rates of deduction from insurance commission under section 194D. The Finance Bill does not propose any change in Part II of the First Schedule to the rates for such income, so deduction goes on at the rates communicated in the Board's earlier circular for the preceding year. Changes are proposed in Sub-Paragraph I of Paragraph A of Part III of the First Schedule, a copy of which is annexed, and where those rates apply the deduction is to be made subject to them. The instructions are to be brought to the notice of all concerned, and any doubt referred to the Income-tax Officer or the Public Relations Officer.

Why it was issued

The Board circulates the position on deduction rates for each year to the persons responsible for deducting insurance commission.

Who it reaches

Insurers paying commission to agents
Insurance agents suffering deduction under section 194D
Officers dealing with deduction on commission for that year

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.194D	s.393

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.

FINANCIAL YEAR 1982-83
1778. Instructions for deduction of tax at source from insurance commission during financial year 1982-83 at the rates specified in Part II of First Schedule to Finance Bill, 1982
1. I am directed to invite a reference to the Board’s Circular No. 300 [F. No. 275/5/81-IT(B)], dated 27-4-1981 wherein the rates at which the deduction of income-tax was to be made during the financial year 1981-82 from payments of income by way of insurance commission under section 194D were intimated.
2. The Finance Bill, 1982 does not propose any change in the rates at which the deduction of income-tax is to be made during the financial year 1982-83 in Part II of the First Schedule to the said Bill from such income. However, some changes have been proposed in Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the said Bill. A copy of the proposed Sub-Paragraph I is annexed. The deduction of tax may, therefore, continue to be made at the rates intimated in the circular referred to in para 1 above subject to the rates proposed to be prescribed in the annexed Sub-Paragraph, wherever the same are applicable.
3. These instructions may please be brought to the notice of all concerned. In case of any doubt the Income-tax Officer concerned and/or Public Relations Officer may be consulted.

Circular: No. 340 [F. No. 275/20/82-IT(B)], dated 6-5-1982.

What to watch

Where the Part III Sub-Paragraph rates are applicable, they govern the deduction rather than the carried-forward flat rate.
The record in hand is inconsistent about which year it speaks to: it is numbered and dated in 1981 while the text is headed for the financial year 1982-83 and closes with a different circular number and a 1982 date, so the year and the rates must be confirmed from the circular itself.
Section 194D, its threshold and its rate have all been amended since, so use the provision in force for the year in issue.

Where you meet it

In an old deduction dispute with an insurer over commission paid to agents.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 31 — Income-tax (Eighth Amendment) Rules, 2009 - Amendments in Forms 24Q, 26Q, 27Q, 27EQ; Substitution of Rules 30, 31, 31A, 25 March 2009
Circular No. 656 — Section 194D l Insurance Commission 26 August 1993
Circular No. 633 — Financial Year 1992-93 20 August 1992
Circular No. 619 — Section 194H l Commission, Brokerage, ETC 1 4 December 1991
Circular No. 614 — Financial Year 1991-92 14 November 1991
Circular No. 570 — Financial Year 1990-91 27 July 1990

← Circular No. 301 · Circular No. 299 →

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.

What this is