The Central Board of Direct Taxes (CBDT) has introduced new tax rules for life insurance policies with premiums exceeding Rs 5 lakh. Under the new rules, sums received from such policies will no longer be exempt from tax, starting from the assessment year 2024-25. This means that policyholders will have to pay tax on the entire amount received, including the sum assured and any bonuses. The new rules apply to all life insurance policies, except unit-linked insurance policies.
Here are some of the key points to note about the new tax rules:
The new rules will only apply to sums received after the assessment year 2024-25.
The new rules do not apply to unit-linked insurance policies.
The new rules will not apply to policies taken for the benefit of a dependent.
Policyholders who have life insurance policies with premiums exceeding Rs 5 lakh should review their policies in light of the new tax rules. If they are concerned about the tax implications, they should consult with a financial advisor.