CBDT informs about changed rules for income from life insurance, premium will be applicable for more than 5 lakhs

The Income Tax Department has made a new rule for calculating income from life insurance. This rule is for those who pay more than Rs 5 lakh as life insurance premium. The Central Board of Direct Taxes (CBDT) has notified the Income Tax Amendment Rules, 2023.

Under this notification, rule 11UACA has been prescribed for computation of income in respect of the amount received on maturity of life insurance policies, where the premium amount exceeds Rs.5 lakh. Such policy must have been issued on or after 1st April.

What will change in the rule?

As per the Income Tax Department changes, tax exemption on maturity benefit under Section 10(10D) for policies issued on or after April 1, 2023 will be allowed only if an individual has an annual maturity of up to ₹5 lakh. Pay the total premium.

Income will be taxed.

Further, the income on payment of premiums exceeding five lakhs will be counted as income and taxed at the applicable rates. Changes in the tax provision in respect of life insurance policies other than ULIPs were announced in the Union Budget 2023-24.

No tax on maturity amount on death.

Experts have said that the amount paid on premium of more than five lakh rupees will be taxed after calculating the income. This tax will be levied on maturity and then the entire amount will be paid. Also, the Income Tax Department has said that the premium amount received on death of a person will not be taxed.

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