# What is tax deducted at source? Does amount under LIC qualify for TDS? **URL:** \ **Category:** Payroll\ **Created:** [June 16, 2020, 7:05am UTC](https://community.greythr.com/t/what-is-tax-deducted-at-source-does-amount-under-lic-qualify-for-tds/290 "2020-06-16T07:05:39Z")\ **Posts on this page:** 4\ **Page:** 1
**Author:** ![Jeevan](https://avatars.discourse-cdn.com/v4/letter/j/cab0a1/32.png) [@Jeevan](https://community.greythr.com/u/Jeevan)\ **Post date:** [June 16, 2020, 7:05am UTC](https://community.greythr.com/t/what-is-tax-deducted-at-source-does-amount-under-lic-qualify-for-tds/290/1 "2020-06-16T07:05:39Z")
What is tax deducted at source? Does amount under LIC qualify for TDS? ---
**Author:** ![Anil](https://avatars.discourse-cdn.com/v4/letter/a/da6949/32.png) [@Anil](https://community.greythr.com/u/Anil)\ **Post date:** [June 19, 2020, 11:29am UTC](https://community.greythr.com/t/what-is-tax-deducted-at-source-does-amount-under-lic-qualify-for-tds/290/2 "2020-06-19T11:29:18Z")
Tax Deducted at Source (TDS) is a system introduced by Income Tax Department, where person responsible for making specified payments such as salary, commission, professional fees, interest, rent, etc. is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment. As the name suggests, the concept of TDS is to deduct tax at its source. Example of TDS assuming the nature of payment is professional fees on which specified rate is 10%. XYZ Ltd makes a payment of Rs 50,000/- towards professional fees to Mr. ABC, then XYZ Ltd shall deduct a tax of Rs 5,000/- and make a net payment of Rs 45,000/- (50,000/- deducted by Rs 5,000/-) to Mr. ABC. The amount of 5,000/- deducted by XYZ Ltd will be directly deposited by XYZ Ltd to the credit of the government. Some of the income sources that qualify for TDS are **Salary** **Amount under LIC** **Bank Interest** **Brokerage or Commission** **Commission payments** **Compensation on acquiring immovable property** **Contractor payments** **Deemed Dividend** **Insurance Commission** **Interest apart from interest on securities** **Interest on securities** **Payment of rent** **Remuneration paid to director of the company, etc.** **Transfer of immovable property** **Winning from games like a crossword puzzle, card, lottery, etc.** ---
**Author:** ![abhiwantech](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/abhiwantech/32/4813_2.png) [@abhiwantech](https://community.greythr.com/u/abhiwantech)\ **Post date:** [April 4, 2025, 12:21pm UTC](https://community.greythr.com/t/what-is-tax-deducted-at-source-does-amount-under-lic-qualify-for-tds/290/3 "2025-04-04T12:21:16Z")
**Tax Deducted at Source (TDS)** is a tax collected by the government at the time of certain payments like salary, interest, rent, commission, etc., to ensure tax is deducted at the source of income. **LIC & TDS:** - **Maturity Amount** : If the sum assured is taxable (not exempt under Section 10(10D)), **TDS @ 5%** is deducted if the payout exceeds ₹1 lakh. - **Premium Paid** : No TDS on premiums paid for LIC policies. - **Commission to Agents** : TDS applies if commission exceeds ₹15,000 in a financial year. ---
**Author:** ![nandakumar](https://avatars.discourse-cdn.com/v4/letter/n/58956e/32.png) [@nandakumar](https://community.greythr.com/u/nandakumar)\ **Post date:** [April 7, 2025, 12:46pm UTC](https://community.greythr.com/t/what-is-tax-deducted-at-source-does-amount-under-lic-qualify-for-tds/290/4 "2025-04-07T12:46:25Z")
Tax Deducted at Source (TDS) is a mechanism by which income tax is collected at the point of income generation. It is deducted by the payer (such as an employer, bank, etc.) and deposited with the government on behalf of the recipient. Generally, premiums paid towards LIC policies do not attract TDS. In fact, such payments may qualify for deductions under Section 80C of the Income Tax Act, subject to conditions. However, TDS may be applicable on maturity proceeds if the policy does not meet the conditions under Section 10(10D) for tax exemption.