Income Tax Rules on Life Insurance Policies for Indians

Financial planning often involves choosing life insurance as part of the strategy. An insurance policy is primarily designed to provide financial assistance to your family in the event of your untimely death, but it can also be used to accumulate wealth over time. How does the sum assure that the policyholder receives on maturity or following his or her death be taxed? The following are a few things we need to know:

The Income Tax Act of 1961, Section 10(10D), mandates that all death benefits are tax-free. However, maturity benefits are taxed according to premiums paid.

Traditional policies calculate maturity amounts as the sum assured plus the bonuses accrued during the policy period (in a with-profit plan). Thus, all annual bonuses declared on the amount in these years should be separated from the sum assured.

Upon maturity, the sum assured amount is fully tax-exemption according to Section 10(10D). In addition, this section also exempts bonuses received in conjunction with the sum assured.

It is important to keep in mind, however, that after April 01, 2012, you will be tax-exempt on policies only if you do not pay more than 10% of the policy sum insured. As long as the total premiums don't exceed 20 per cent of the sum assured if the policies were issued before April 1, 2012, the sum assured will not be taxed.

There are similar conditions that must be met by life insurance policies in order to qualify for tax relief under Section 80C.

There are stark differences between the tax consequences of unit-linked insurance plans (ULIPs). In accordance with the income tax regulations announced under the Budget, for ULIPs with annual premiums up to INR 2.5 lakh allocated on or after February 1, 2021, the return on maturity would be treated as capital gains and taxed under Section 112A.

Comments

Check Summary of 2023 MCA Amnesty Scheme for LLP e-Forms

The discussion shall take place for "Latest Amnesty Scheme introduced by MCA in relation to Limited Liability Partnership". A General Circular No 08/2023 Dated: 23rd August 2023- Subject- Condonation of Delay in filing of Form-3, Form 4, Form 11 u/s 68 of LLP Act, 2008 is been issued by the MCA. MCA has acknowledged that they've received numerous complaints regarding technical glitches on their website and discrepancies in the master data. These issues have prevented Limited Liability Partnerships (LLPs) from submitting the LLP-3, LLP-4, and LLP-11. In order to facilitate a more business-friendly environment, the MCA is utilizing its authority under Section 67 of the LLP Act, 2008. They have decided to grant a one-time relaxation in additional fees and any related penalties for delayed filing of the aforementioned three forms, as elaborated in this article. However, one aspect of this initiative raises some confusion. Why hasn't the MCA included Form LLP 8 in this a

All Special Features of Gen I-T Software with Downloading Steps

Gen IT is one of the income tax software created by professionals from SAG Infotech Pvt. Ltd. This software helps to compute Income Tax, Interest Calculations, Advance and Self Assessment Tax. The software is created with high quality-perfection to prepare returns. It also provides e-filing to upload returns with the help of the software. This software is proficient in calculating Income Tax, Advance, Interest Calculations, and Self Assessment Tax. The quality of the software is very high as the returns are prepared by it. The software provides the facility to file and upload returns. Also, there are simple steps to download the free download Gen IT software for the trial version. To complete the processes, the Gen Income Tax returns filing software has 2 different sections which include - Client Manager, Income Tax, Billing, AIR, Calculator, Backup/Restore, Password and Printer Settings, Bulk SMS/E-Mail and Help. These operations are explained briefly below- 1. Client Mana

All About Advance Tax Payment Rule Under IT Act, 1961

A tax expert answers the question- ‘the requirements of advance tax provisions under the Income-tax Act 1961’. Advance tax, as the name itself indicates that the tax paid by individuals in the financial year when the corresponding income is earned, rather than in the assessment year when the income is assessed for taxation purposes. This payment is calculated based on the consolidated income earned and expected to be earned from various sources, such as salary, rent, interest, and more. It takes into account applicable deductions, exemptions, and credits for taxes deducted at source (TDS) or taxes collected at source (TCS). According to section 208 of the Income Tax Act, 1961, individuals whose estimated tax liability for the year amounts to Rs. 10,000 or more are required to pay advance tax. However, senior citizens aged 60 years or above who are residents and do not earn any income from business or profession are exempt from paying advance tax. Typically, advance tax payments are ma

SAG Infotech: Need Tax Software (Call 0141-4072000)

Search This Blog