IT Department unveiled new guidelines-Life insurance rates...
The Income Tax Department has updated the rules for computing income from life insurance policies where the annual premium is more than Rs 5 lakh. The Central Board of Direct Taxes (CBDT) introduced the Income Tax Amendment (Sixteenth Amendment) Rules, 2023, which include these modifications. According to Mint Genie, the new rules are included in Rule 11UACA.
In simple words, if you take a life insurance policy with an annual premium of more than Rs 5 lakh, the maturity income will be taxable. This is not the case with policies with a premium of less than Rs 5 lakh, which are still tax-free.
What does the New Testament say?
Tax exemption on maturity benefit under section 10(10D) will be valid only for policies issued on or after april 1, 2023, if the total premium paid per annum by an individual does not exceed Rs.5 lakh.
Statement of the Central Board of Direct Taxes
As stated by the CBDT, "It should be mentioned that the Finance Act, 2021 had previously added the fourth through seventh provisos to section 10(D) clauses to stipulate that under any Unit Linked Insurance Policy [ULIP] Amount received (excluding any such amount on the death of an individual), issued on or after the 1st day of february 2021, shall not be exempt under the said clause if during the term of such policy in any of the previous years 2,50,000 in excess of Rs.2,50,000.”
It further added that “It was further provided that if the premium is payable for more than one ULIP issued on or after the 1st day of february 2021, the exemption under the said clause shall be available in respect of such policies only. Where the total premium does not exceed Rs.2,50,000."
