Commission to lic agent.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2014 What is the accounting treatment for Commission paid to Insurance agent in the books of insurance company?

CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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30 September 2014 On passing expense entry,
Commission exp. Dr.XXXX
To TDS on commission a/c. Cr.XXX
(if applicable)
To name of party (insurance agent) Cr.XXX

On making payment,
Insurance agent a/c. Dr.XXX
To Cash / bank a/c. Cr.XXX

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Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2014 How to pass entries of service tax in the case of services provided by insurance agent, in the books of insurance company?

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CA Devanand Jethanandani

CA Devanand Jethanandani (Expert)
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30 September 2014 If service tax is applicable to the agent, then the insurance company has to take service tax invoice from him and entries in the books of the insurance co. will be as under,

Commission exp. Dr.XXXX
Service tax receivable 12% Dr.XXXX
Service tax edu. Cess 2% Dr.XXXX
To TDS on commission a/c. Cr.XXXX
(if applicable)
To name of party (ins. agent) Cr.XXX

On making payment,
Insurance agent a/c. Dr.XXX
To Cash / bank a/c. Cr.XXX

Kindly note: TDS will be deducted (if applicable) on basic amount and not on service tax portion.

Thanks.

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