Reg. TDS for Insurance Commission...
This query is : Resolved
20 June 2020
I understand the TDS for Insurance agents is 5%. I would like to know how it is calculated. I receive Form 16A that states I have been paid / credited 100/- as commission & 5/- is deducted & paid as TDS. Is my total income then - 105/-? I was thinking that my income is 95/- & TDS should be 5/-. But that does not seem to be the case - Could some one help me understand how TDS is calculated & while filing returns should we add up both TDS credited amount + commission paid amount to arrive at gross income to file taxes?
20 June 2020
While filing returns you should add up both TDS credited amount + commission paid amount to arrive at gross income
21 June 2020
TDS is being calculated on gross value which will be the amount to receive and then tds need to calculate by % and remaining amount will be paid off. So if your gross commission is 100 then 5% tds will be 5 so you will received 95 paid amount and 5 will be in tds but your gross income is 100 not 95 or 105. you have to show gross value as income. if you received 100 paid + 5 tds then your total income will be 105 for sure.
21 June 2020
Thank you for your replies. But in my Form 16A I see that the amount credited is 100/- & TDS deposited is 5/- meaning they have calculated TDS on the amount credited which then is wrong as per my understanding.
21 June 2020
Your BOA will not tallied if you take 95 as income. I show how to do entry in your BAO.
When amount receivable
Party A/c Dr 95
TDS Dr 05
To Commission Income 100
When Commission received (after deduction)
Bank A/c Dr 95
To Party A/c 95
When you got refund amount in your bank (if refundable)
Bank A/c Dr 05
To TDS A/c 05
When amount receivable
Party A/c Dr 95
TDS Dr 05
To Commission Income 100
When Commission received (after deduction)
Bank A/c Dr 95
To Party A/c 95
When you got refund amount in your bank (if refundable)
Bank A/c Dr 05
To TDS A/c 05
21 June 2020
Thank you - I found out the issue. The credit that has happened in the bank is 100-5 = 95 only. But then, in the Form 16A, it is been shown as "Amount Paid / Credited" (Gross amount) & then "TDS Deposited" for the Gross amount. Hence the confusion. I suppose the usage in Form 16 is not right & is confusing. The credit to the bank account is proper. Thanks for your time.
21 June 2020
Form 16A is right in your case if they shown 100 as credited or 95 as paid. There is not confusion from there part. you need to understand the concept sir, for that i have given you the exact entry for your BOA.
21 June 2020
Understood sir. Thank you so much for your kind reply.
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