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If you are working as an insurance agent, filing your Income Tax Return is important for various reasons. Insurance commission income is taxable and needs to be disclosed properly while filing ITR. Whether you are working part-time or full-time, earning from LIC or any private insurer, the income you receive is considered commission income and taxed under “Income from Business or Profession”.
Many agents are unsure about which ITR form applies to them, how to handle TDS deductions on commission, or how to claim eligible expenses. Filing your ITR correctly helps in getting TDS refunds, building financial credibility and avoiding penalties from the tax department.
In this guide, we will explain the ITR filing process for insurance agents, which ITR form you should use, how to report income and expenses, and how to save tax in a legal manner.
Latest updates
- ITR filing Due date for FY 2024-25 (2025-26) has been extended from 31st July 2025 to 15th September 2025
Income tax on Insurance Agents
Income earned by an insurance agent is treated as income from business or profession under the Income Tax Act. It primarily consists of commission received from insurance companies like LIC or private insurers. This income is fully taxable after allowing eligible deductions for expenses directly related to earning the commission. TDS is usually deducted by insurance companies under Section 194D if the commission exceeds the threshold limit. Insurance agents can claim expenses such as travel, phone bills, promotional costs, and office expenses to reduce their taxable income. If the total income exceeds the basic exemption limit, they are required to file an Income Tax Return.
TDS on Comission income Under Section 194D
Insurance companies deduct TDS under Section 194D once the total commission paid in a financial year exceeds ₹15,000. The applicable rates are:
5 % for individual or HUF agents
10 % for domestic corporate agents
If PAN is missing, TDS increases to 20 %.
Ad‑hoc Expense Deduction for Small Agents
Agents (especially LIC agents) with gross annual commission up to ₹60,000 and without detailed expense records can claim ad‑hoc deductions capped at ₹20,000:
50 % of first‑year commissions
15 % of renewal commissions
If commission details are not segregated, a flat 33.33 % deduction applies
Agents with commission income over ₹60,000 or who maintain proper books can claim actual business expenses—such as travel, office rent, depreciation, communication, marketing—under relevant sections (Sections 30–43B, 32)
Bookkeeping & Audit Requirements
Under Section 44AA, agents must maintain books if:
Business income exceeds ₹1,20,000 per year, or
Total receipt exceeds ₹10 lakh in any of the preceding three years.
Additionally, tax audit under Section 44AB applies if turnover exceeds ₹1 crore
What are Deductions and exemptions available to Insurance agent?
Business expenses like travel, fuel, telephone, internet, promotional material, and office rent directly related to earning commission income
Depreciation on assets such as computer, laptop, printer, or two-wheeler used for work
Section 80C deductions for LIC premium, ELSS, PPF, NSC, home loan principal, etc. (up to Rs 1,50,000)
Section 80D for medical insurance premium for self and family (up to Rs 50,000)
Section 80G for donations to specified charitable institutions
Section 80TTA for interest earned on savings bank account (up to Rs 10,000)
Section 80E for interest on education loan
Section 80CCD(1B) for additional deduction up to Rs 50,000 under NPS
Section 80U in case of disability
Section 80DD or 80DDB for medical treatment of dependent family members
Insurance agent profit and loss statement
| Particulars | Rs. | Particulars | Rs. |
| To Salary to Staff | 1,20,000 | By Commission income | |
| To Office Rent | 96,000 | – Life insurance | 4,56,100 |
| To Travelling Expense | 48,000 | – Health Insurance | 3,65,102 |
| To Stationery Expense | 18,000 | – General Insurance | 2,65,400 |
| To Telephone Expense | 8,000 | ||
| To Marketing expense | 30,000 | ||
| To Electricity expense | 12,000 | ||
| To Depreciation on Laptop & Equipment | 20,000 | ||
| To Office expense | 10,000 | ||
| To Net Profit | 7,24,602 | ||
| Total | 10,86,602 | Total | 10,86,602 |
Income tax rates for Insurance agent
Old tax Regime
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Which ITR form is applicable to insurance agent?
Insurance agents are required to file ITR-3 as their commission income is treated as income from business or profession. Since this income does not qualify under presumptive taxation schemes like Section 44AD or 44ADA, they cannot use ITR-4. Even if the agent earns only commission and no other business income, ITR-3 is mandatory for accurate disclosure. Filing the wrong form may lead to the return being considered defective. If the agent also has income from salary, house property, or capital gains, it can be reported in ITR-3 along with the business income.
In case Commission is a secondary source of income then such income should be reported under ‘Income from other sources’. The ITR form applicable will be based on the type of other income sources like salary, business, capital gains and rent.
Benefits of ITR Filing for Insurance agent
- Helps claim TDS refund deducted by insurance companies under Section 194D
- Required for obtaining personal loan, home loan, business loans, credit card and term insurance.
- Acts as valid proof of income for visa applications and government tenders
- Acts as proof of income and profession in case of future scrutiny
- Allows carry forward of business losses to future years
- Prevents late fees, penalties, and legal notices from the Income Tax Department
- Allows insurance agents to claim deductions for business-related expenses
Process of ITR filing for Insurance agent
Login to Income Tax Portal
Visit www.incometax.gov.in/iec/foportal/ and log in using your PAN and password. If not registered, complete the registration first.Navigate to File Return
Go to the ‘e-File’ menu and select ‘Income Tax Return’. Click on ‘File Income Tax Return’ and select the relevant assessment year.Select Filing Mode
Choose Online mode for easier filing. For offline utility, download and upload after filling.Select Status and ITR Form
Choose your filing status as Individual and select ITR-3, which is applicable for commission income from insurance agency work.Choose Reason for Filing
Select the reason—whether your income exceeds the basic exemption limit or if TDS has been deducted.Fill Income Details
Under the “Income from Business or Profession” tab, report commission income received. Mention business code 13010 – Insurance agents.Enter Expense and Deduction Details
Enter details in balance sheet and Profit & loss A/c by adding eligible business expenses. Also, claim deductions under 80C, 80D, etc., in the “Deduction” section.TDS and Advance Tax Details
TDS details in Form 26AS data will be auto-filled. Confirm advance tax or self-assessment tax paid, if any.Verify Tax Calculation
Ensure total tax liability or refund is correct as per the portal’s auto-calculation.Preview and Submit
Preview your filled return. Once verified, click on “Submit”.E-Verify Return
Choose from Aadhaar OTP, Net Banking, or DSC to e-verify the return. E-verification is mandatory to complete the filing process.
Once submitted and verified, an ITR-V acknowledgement is generated and can be downloaded for your records.
What is the Due date of ITR filing for Insurance agent?
The Due date to file Income tax return for FY 2024-2025 (AY 2025-2026) is 31st July,2025 which is extended to 15 th September, 2025.
In case you miss this deadline then you can file belated ITR till 31st December, 2025 with late fees.
Also for any mistake made while filing ITR before due date, you can make corrections by filing Revised ITR any number of times till 31st December, 2025
If you miss deadline of Belated income tax return filing then you can file Updated ITR (ITR U) till 4 years from the end of relevant assessment year with late fees and additional taxes.
What are the Consequences of non-payment of Tax and non-filing of ITR?
Failing to pay taxes and file your Income Tax Return (ITR) has severe consequences. Firstly, unreported income is deemed illegal, equating to tax evasion, and can result in a penalty of 100% to 300% of the evaded tax under Section 271(C). Secondly, a penalty ranging from 10% to 90% of the undisclosed amount may be imposed under Section 271AAB, depending on the circumstances. Lastly, if you miss the filing deadline, a 1% interest per month or part thereof will be charged on the unpaid tax amount as per Section 234A.
Looking for help?
Whether you are an insurance agent earning commission or have multiple income sources, we ensure smooth and compliant ITR filing tailored to your income profile. Let our expert team handle your deductions, TDS, and proper reporting under the right ITR form.
Call us today or WhatsApp your documents to get started.
Contact us today at +91 9769647582 for a consultation or to get started with your ITR filing
Frequently Asked Questions
Commission income is treated as business income, so you should file ITR-3.
Insurance agents are taxed under the head Income from Business or Profession. Tax is levied on net income after deducting eligible business expenses.
The income tax rate is as per the slab rates applicable to individuals. There is no special rate for commission income.
TDS is deducted at 5 percent under Section 194D if the total commission exceeds ₹15,000 in a financial year.
Insurance commission is taxable under Income from Business or Profession.
No, Section 44AD is not applicable for commission income. Insurance agents must report income under regular provisions.
TDS under Section 194D is applicable only if total commission exceeds ₹15,000 in a year.
It should be shown under the ‘Business or Profession’ section in ITR-3 with correct business code and income details.
Login to the income tax portal, select ITR-3, enter income under business/profession, claim expenses and deductions, and e-verify the return.
Yes, GST is applicable if the insurance agent crosses the GST threshold. However, if working as a pure agent for a company under reverse charge, GST may not be applicable on the agent.
Under the ‘No books of account’ section or ‘Balance Sheet & P&L’ if books are maintained, using business code 13010 for insurance agents.
LIC commission income is also business income. The correct form is ITR-3.
Use 13010 – Insurance agents while filing ITR.
LIC agents should file ITR-3, report total commission income, claim allowable expenses, enter TDS details, compute tax, and submit return through the income tax portal with proper e-verification.
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