As per Section 10(10D) of the Income Tax Act, 1961, death benefits are always tax-free. Maturity benefits, however, are taxed based on the premiums.
Life insurance is one of the most sought-after options chosen by people as part of financial planning. While the primary purpose of a life insurance policy is to provide your family financial assistance in case of an untimely death, it also helps in wealth accumulation. But is the sum assured received on maturity or after the death of policyholder taxable? Let’s find out:
As per Section 10(10D) of the Income Tax Act, 1961, death benefits are always tax-free. Maturity benefits, however, are taxed based on the premiums.
The maturity amount from traditional policies is made up of two parts: The sum assured and the total of bonuses accrued (in a with-profit plan) over the policy period.
This means that you must segregate the sum assured from the annual bonuses declared on the amount during all these years.
As per Section 10(10D), the sum assured amount received on maturity is completely free of tax. Alongside, the bonuses received with the sum assured are also exempt under this section.
This means that you must segregate the sum assured from the annual bonuses declared on the amount during all these years.
As per Section 10(10D), the sum assured amount received on maturity is completely free of tax. Alongside, the bonuses received with the sum assured are also exempt under this section.
Source: https://mintgenie.livemint.com/news/personal-finance/income-tax-here-s-how-life-insurance-policies-are-taxed-in-india-151669755394930
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