A major update for everyone as The Income Tax Department has notified a new income tax liability.
As per the latest notification, you have to pay taxes on any sum received under a life insurance policy when the yearly premium exceeds Rs 5 lakh.
Let’s learn all about the latest update of Life insurance policy bonus received made taxable through this article.
Tax implications of life insurance policies with annual premium exceeding Rs. 5 lakh
- For life insurance policies issued on or after April 1, 2023, the maturity amount will not be tax-free if the annual premium paid for any of the previous years during the term of the policy exceeds Rs. 5 lakh.
- This rule does not apply to unit-linked plans.
- The changes will come into effect from the assessment year 2024-25.
Thus, as per the latest notification, you have to pay taxes on maturity amount if you buy a life insurance policy on or after April 1, 2023, and the annual premium for any of the previous years during the term of the policy exceeds Rs. 5 lakh.
However, this rule does not apply to unit-linked plans. If you have any other doubts, feel free to consult our professional CA:
New Rules on Tax Exemption for Life Insurance Policies
- Previously, you were not required to pay taxes on the money you received from life insurance policies, including any bonuses.
- However, a new law has been passed. As per the latest law, you will need to pay taxes on the money received from life insurance policies if the annual premium you pay for all the life insurance policies is more than Rs. 5 lakh.
- This is to ensure that people do not use life insurance policies as a way to avoid paying taxes on their income.
- However, you will receive tax break if:
- You receive the sum on the death of a person.
- Your all life insurance policies excluding Ulips do not exceed Rs. 5 Lakhs.
- The new law will come into effect from April 1, 2023.
Moreover, If you want any other guidance relating to Life Insurance Policy Bonus received are Taxable Now, please feel free to talk to our business advisors at 8881-069-069.
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