Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
- Guaranteed@ Income Benefit for upto 25 years
- Flexibility to choose income period
- Premium break for females on child birth or any listed specific illnesses
- Life cover for the premium payment period
- Enhance your life cover with rider offerings
ARN. No. KLI/23-24/E-BB/1201
Features
- Increasing Life Cover*
- Guaranteed^ Maturity Benefits
- Enhanced Protection Through Riders
- Tax Benefits
- Dual Benefits: Guaranteed^Maturity + Death benefits
Ref. No. KLI/22-23/E-BB/999
Tax Exemption on Life Insurance Premium Over ₹5 Lakhs & Union Budget 2023
According to the Union Budget 2023, only life insurance policy income with a premium of up to ₹5 lakh will be free from taxation. Read ahead to know all about it.
- 22,273 Views | Updated on: Mar 21, 2024
The Union Budget 2023 is a comprehensive report that covers all aspects of the economy, including tax policies, public spending, and revenue generation.
In this year’s budget, the government has proposed significant changes in the tax exemption policies above ₹5 lakhs annually. This move has created a lot of buzz in the financial and tax circles as it is likely to impact the income of a large section of the population. In this article, we will delve into the details of the proposed changes and analyze their impact on individuals earning above ₹5 lakhs.
The Impact on Tax Exemptions of Policies Over ₹5 Lakhs
- The most significant change proposed in the budget is the removal of tax exemptions for policies above ₹5 lakhs. Currently, premiums paid for all the insurance policies are exempted from tax. However, the budget proposal seeks to do away with this rebate for policies with annual premium above ₹5 lakhs. This move aims to increase the tax base and generate additional revenue for the government.
- In addition to the removal of the tax rebate, the budget has also proposed the discontinuation of several other tax exemptions, including those related to medical expenses, transport allowance, and education expenses. This move is expected to increase the tax liability of policies above ₹5 lakhs and may lead to an increase in their monthly outgo towards taxes.
Understanding Policy Premiums, Maturity Amount, and Tax Rules
Life insurance is a crucial financial tool for ensuring the financial security of one’s family. With the recent Union Budget 2023, there have been several changes in the tax rules and exemptions for life insurance policies.
- The government has implemented a number of initiatives to entice people to get more high-premium life insurance. The tax exemption on life insurance premiums up to ₹5 lakh was one of the main proposals.
- The proposal in the Union Budget states that when the total yearly premium exceeds ₹5 lakh, the policy will be compelled to pay tax on the maturity amount of life insurance products.
- However, it is important to note that this tax exemption is only applicable until the 31st of March, 2023. Therefore, individuals who wish to maximize their tax benefits must act quickly and buy higher premium policies before the deadline.
Wrapping Up
As per the new proposal, the premium paid for life insurance policies with a sum assured of more than the premium for ₹5 lakh life insurance will be exempt from taxation under Section 80C of the Income Tax Act. This will help in providing tax relief to individuals who invest a significant amount in life insurance policies and also make such policies more attractive for people who are looking for long-term investment options.
Key takeaways
Understanding Policy Premiums, Maturity Amount, and Tax Rules
- The government has implemented a number of initiatives to entice people to get more high-premium life insurance. The tax exemption on life insurance premiums up to ₹5 lakh was one of the main proposals.
- The proposal in the Union Budget states that when the total yearly premium exceeds ₹5 lakh, the policy holder will be compelled to pay tax on the maturity amount of life insurance products.
- However, it is important to note that this tax exemption is only applicable until the 31st of March, 2023. Therefore, individuals who wish to maximize their tax benefits must act quickly and buy higher premium policies before the deadline.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
- Guaranteed@ Income Benefit for upto 25 years
- Flexibility to choose income period
- Premium break for females on child birth or any listed specific illnesses
- Life cover for the premium payment period
- Enhance your life cover with rider offerings
ARN. No. KLI/23-24/E-BB/1201
Features
- Increasing Life Cover*
- Guaranteed^ Maturity Benefits
- Enhanced Protection Through Riders
- Tax Benefits
- Dual Benefits: Guaranteed^Maturity + Death benefits
Ref. No. KLI/22-23/E-BB/999
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The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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