Tax will be imposed on earning more than 5 lakhs from insurance policy, rule changed
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New Delhi : For life insurance, now the policyholders will have to pay tax on the income earned on the maturity of the policy on a premium of five lakhs annually. The reason for this is that the Income Tax Department has changed the rules for calculating maturity proceeds of life insurance policies with an annual premium of more than five lakh rupees. In a statement issued by the Income Tax Department, it has been said that the policyholders who pay a premium of more than five lakh rupees in a year under their policy and the income they earn from it on maturity of the policy, will now be taxed. The benefit of exemption from income tax will not be given to the insured by the department.
Rule-11 will be calculated under UCA
According to the news coming in the media, the Income Tax Department has set a new rule for the calculation of income from life insurance policies with a premium of more than five lakh rupees in a year. For this, the Income Tax Act (16th Amendment)-2023 has been notified by the Central Board of Direct Taxes (CBDT). As per the amendment made in the rules by CBDT, Rule-11 UAC has been prescribed for the calculation of income in respect of maturity amount of life insurance policy.
The new rule will be applicable from April 1, 2023
In a statement issued by the Income Tax Department, it has been said that this provision is for insurance policies in which the premium amount is more than five lakh rupees and such policies have been issued on or after April 1, 2023. This means that the new rule of the Income Tax Department will be applicable from April 1, 2023 on the income from the premium of life insurance policy.
who will pay the tax
As per the amendment in the Income Tax Act, maturity benefit u/s 10(10D) for policies issued on or after April 1, 2023, will be exempt from income tax only if the total premium paid by an individual Five lakh rupees per annum. The amount received for premiums in excess of this limit will be added to his income and then that income will be taxed as per the applicable rate.
Who will get tax exemption
Explain that during the general budget presented by Finance Minister Nirmala Sitharaman in the Parliament on February 1 for the financial year 2023-24, the change in tax provision was announced in relation to life insurance policies except ULIP (Unit Linked Insurance Plan). was done. According to the formula, any surplus amount received on maturity will be taxed under the category of ‘income from other sources’ (TDS), said Om Rajpurohit, joint partner (corporate and international tax), AMRG & Associates. However, the taxation provision for the amount received on the death of the life assured has not been changed and will be exempt from income tax as before.
what is the premium of life insurance
Life insurance premium is the amount that is paid by the policyholders for a specified period of time and allows them to avail life insurance benefits. One can choose their premium payment mode as per their requirements. Age is an important factor while calculating the life insurance premium.
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