Tuesday , June 18 2024

Income Tax: Now income tax will be collected on this policy also, department gave update

New Delhi: Even though life insurance policy has become a necessity after the Corona epidemic, even today most people see it only as a means to save tax.

This type of policy offers three times the benefits, which is why most people see it as a good option. But, in the budget of 2023, the government has changed the rules related to insurance policies.

In fact, the government had announced in the budget that if the annual premium of a life insurance policy is more than Rs 5 lakh, then income tax will have to be paid on its returns.

Now the Central Board of Direct Taxes (CBDT) has issued a notification saying that if a premium of more than Rs 5 lakh has been paid on a life insurance policy, then its returns will be considered part of income and will be taxable. , Income tax will have to be paid.

When will this be applicable to the policy purchased?

Citing the 16th amendment of Income Tax, CBDT has said in its notification that according to Rule 11UACA, the new rule will be applicable to life insurance policies purchased after April 1, 2023.

Under this, if the total premium of the policy in a year is more than Rs 5 lakh, then income tax will be levied on the income i.e. returns generated from it.

If there is more than one policy…

In the changed rules regarding insurance policies, it is clearly stated that if there is more than one policy, then the premium for all will be calculated together. If their premium does not exceed Rs 5 lakh then the return received on its maturity will be completely tax free.

Under Section 10(10D) of Income Tax, the amount received on maturity of the insurance policy is exempt from income tax. But, now if the premium amount is more than Rs 5 lakh then the money received on its maturity will come under the ambit of income tax.

There is still a chance for tax exemption-

The government has changed the rules of life insurance, but you will still get the option of tax exemption. In fact, despite the change in the rules, it has been said that the limit of Rs 5 lakh will not be applicable on any ULIP insurance policy.

It has been said in the Budget 2023-24 that except ULIP policies, the premium rule of Rs 5 lakh will be applicable on all other policies. Apart from this, even if the insured dies before the maturity of the policy, the entire amount will be out of the ambit of income tax. Even if its premium is more than Rs 5 lakh.