Rate of deduction for expenses incurred from commission of small savings agents. - Income Tax - 1751/CBDT

INSTRUCTION NO. 1751/CBDT Dated: February 24, 1987 The matter regarding a fixed rate of deduction for expenses incurred by the authorised small savings agents out of the commission payable to them where no detailed accounts are maintained had been under consideration of the Board. In the cases of agents for sale of National Savings Certificates appointed under the general agency system and the agents of Post-office Time Deposits, the deduction is being allowed @ 40 per cent of the gross receipts from commission under Board's instructions issued from time to time. In the cases of the authorised agents on the deposits secured under the public provident fund, however, the rate of deduction was raised from 40 per cent to 50 per cent by Board's instruction No. 1546 (F.No. 168/9/83-ITA. 1) dated the 6th January, 1984 while enhancing the rate of deduction in respect of first year's commission earned by insurance agents of the Life Insurance Corporation of India. 2. It has been represented that there are no instructions for fixed rate of deduction out of the commission earned for the sale of the following securities by the agents appointed under the Standardised Agency System : (1) National Savings Certificates - II Issue (2) National Savings Certificates _ VI Issue (3) National Savings Certificates _ VII Issue (4) Social Security Certificates. It is further represented that looking into the increase in costs, the deduction out of the commission earned by the authorised agents for post-office time deposits should be increased from 40 percent to 50 percent and this increased benefit of 50 per cent deduction should also be extended to the authorised agents of the above Government securities. Similar requests have been received for enhancing the rate of deduction from commission payable to the agents of the Unit Trust of India. 3. Having regard to the increase in costs, and in order to bring uniformity the Board have decided that the benefit of ad-hoc deduction at the rate of 50 per cent of the gross receipts of commission for expenses be extended to the cases of the authorised agents of Unit Trust of India and the agents of the following securities :- (1) National Savings Certificates - II Issue (2) National Savings Certificates - VI Issue (3) National Savings Certificates - VII Issue (4) Social Security Certificates (5) Post Office Time Deposits. The benefit of this ad-hoc deduction will, however, be available only in cases where gross commission earned is less than Rs. 60,000/- and no detailed accounts are maintained. 4. These instructions may please be brought to the notice of all officers working in your charge.