Circular No. 594

461. Deduction for expenses on commission payable to agents appointed under the Standardised Agency System for Government securities and the agents of Post Office Time Deposits and Unit Trust of India

What this is

Circular No. 594 was issued by the Central Board of Direct Taxes on 27 February 1991. Its subject is 461. Deduction for expenses on commission payable to agents appointed under the Standardised Agency System for Government securities and the agents of Post Office Time Deposits and Unit Trust of India.

What it does

Extends the ad hoc deduction of fifty per cent of gross commission, allowed to agents who keep no detailed accounts and whose gross commission is less than Rs. 60,000, to the currently notified small savings schemes. The benefit had been available to authorised agents of the Unit Trust of India and to agents of National Savings Certificates II, VI and VII Issues, Social Securities Certificates and Post Office Time Deposits. It will now be given to authorised agents of the Unit Trust of India and agents of National Savings Certificates VIII Issue, Social Securities Certificates, Post Office Time Deposit Accounts, Post Office Recurring Deposit Accounts, the National Savings Scheme, 1987, the Post Office Monthly Income Account Scheme, Kisan Vikas Patra, Public Provident Fund Accounts and the Deposit Scheme for Retiring Government Employees, 1989.

Why it was issued

The agents pointed out that some of the older certificates had been discontinued and new schemes notified, and asked that the same ad hoc deduction be allowed on the currently notified schemes.

Who it reaches

Agents under the Standardised Agency System for Government securities
Agents of Post Office Time Deposits and other small savings schemes
Authorised agents of the Unit Trust of India
Assessing Officers computing such agents' income

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.

461. Deduction for expenses on commission payable to agents appointed under the Standardised Agency System for Government securities and the agents of Post Office Time Deposits and Unit Trust of India

1. The agents of Standardised Agency System, Post Office Time Deposits and Unit Trust of India, have drawn the attention of the Board to the fact that where no detailed accounts are maintained and the gross commission received by them is less than Rs. 60,000, the benefit of an ad hoc deduction for expenses, at the rate of 50 per cent of the gross receipts of commission, is available to the authorised agents of Unit Trust of India and the agents of the following securities :—

(i) National Savings Certificates II Issue;

(ii) National Savings Certificates VI Issue;

(iii) National Savings Certificates VII Issue;

(iv) Social Securities Certificates; and

(v) Post Office Time Deposits.

2. In view of the discontinuance of some of the above certificates and the notification of new schemes, the aforesaid agents have requested that the currently notified schemes, as listed in paragraph 3 below, may be allowed the benefit of the same ad hoc deduction.

3. The Board has considered these representations and has decided that the benefit of an ad hoc deduction, at the rate of 50 per cent of the gross receipts of commission, be given to the authorised agents of Unit Trust of India and the agents of the following securities :—

(1) National Savings Certificates VIII Issue;

(2) Social Securities Certificates;

(3) Post Office Time Deposit Accounts;

(4) Post Office Recurring Deposit Accounts;

(5) National Savings Scheme, 1987;

(6) Post Office Monthly Income Account Scheme;

(7) Kisan Vikas Patra;

(8) Public Provident Fund Accounts; and

(9) Deposit Scheme for Retiring Government Employees, 1989.

Circular : No. 594, dated 27-2-1991.

What to watch

The concession is for agents who keep no detailed accounts and whose gross commission is less than Rs. 60,000; an agent above that figure or with accounts is outside it.
The deduction is fifty per cent of gross commission and is in place of, not in addition to, actual expenses proved.
It applies to the nine schemes listed; commission on a scheme not on the list is not covered.

Where you meet it

In the assessment of a small savings agent where the ad hoc fifty per cent deduction against commission is disallowed.

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.