Can some one explain that one of my friend is an agent of Life Insurance. He earned Rs. 75000/- as commission on premium during last year.
Beside that commission he also have income from salary which is Apx. 175000/- Per anum
He got some exemption against the commission earned in FY 2006-07. Please explain that what exemption should he gets on commission earned in FY 2007-08.
Regards
Rajesh
CA RAMESH KUMAR AHUJA
(CA, DISA, LLB)
(5452 Points)
Replied 01 August 2008
He can claim deduction of expenses on adhoc @ 50% on first year commission or 15% on the renewal insurance commission as per Circular No 648 dated 30.03.93. In case, separate figures of commission for new and renewed policies are not available in that case the claim of expenses can be made at a percentage of 33 1/3 % as given in the said circular. However, the circular is applicable in case the commission is upto 60000/-.
BASAVARAJ
(SERVICE)
(37 Points)
Replied 01 August 2008
My name is B S PATIL
I work for lic as dev officer in Fort br Mumbai
i am looking for chartered accountants who may be intrested in starting career as insurance consultants
pl contact me at
B S PATIL
LICDEV OFFICER
FORT MUMBAI 400001
9820084635
DEAR MR AHUJA
THANKS FOR YOUR ADVICE. I GOT THE CIRCULAR YOU HAVE MENTIONED
AS PER CIRCULAR NO 594 dated 27.02.91 THE 50% ADHOC DEDUCTION IS NOT APPLICABLE ON INSURANCE COMMISSION, PLEASE CHECK IT AT YOUR END.
AS MY FRIEND EARNED COMMISSION ON POLICIES OF LIFE INSURANCE
PLEASE ADVICE
REGARDS
RAJESH
Commission received by LIC agents or other agents of LI companies ,can claim exemption on the First year commission to the extent of 50% provide the total commsion is with in 60,000/=. In your case the total commission earned is Rs. 75000/= , so that it is not applicable to you. But you can prepare a I / E a/c and show your expenses for earning the commission and the net income can be taken as your Income .
CA RAMESH KUMAR AHUJA
(CA, DISA, LLB)
(5452 Points)
Replied 01 August 2008
Dear Mr. Rajesh,
I had mistakenly mentioned the circular no as 594 instead of 648 and I have accordingly modified my earlier reply. In the instant case the commission amount is 75000/- as such the said circular is not applicable and the expenses incurred actually may be claimed out of the commission earned from the insurance business.
CA RAMESH KUMAR AHUJA
(CA, DISA, LLB)
(5452 Points)
Replied 04 August 2008
The requirement for maintenance of books as per section 44AA is not required in case receipt is less than 10lac and the income is also less than Rs1.2 lac. However, the said circular is not applicable In case commission received is more than Rs 60,000/- . To justify the claim for actual expenses, the accounts are supposed to be maintained. The expenses can be claimed and sustantiated from the books of accounts.
Abhishek Kumar
(Business)
(34 Points)
Replied 05 October 2008
Is service tax deducted on insurance commission also an expense?
Rohit Khare
(student)
(111 Points)
Replied 23 October 2008
Hi ,
As fae as my knowledge is concerned there certain services wherein instead of service provider receipient of service is liable to pay service tax. Relationship between Insurance Company and Insurance Agent is one such case wherein Insurance agent eventhough is a service provider is not liable to collect and pay service tax but insurance company which is a receipient of service is liable to pay service tax.
Please tell me if I m wrong.
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