The Central Board of Direct Taxes (CDT) has issued guidelines on the recent Finance Act 2023 which introduced changes in taxation of life insurance policies.
The guidelines explain the implications of the amendments under various situations with examples and has clarified that the prescribed premium threshold shall be exclusive of GST component.
As per the Finance Act, 2023, with effect from AY24-25, the sum received under a life insurance policy, other than unit linked insurance policy (ULIP), issued on or after April 1, 2023, shall not be exempt under Section 10(10D) if the amount of premium payable for any of the previous years during the term of such policy exceeds ₹5 lakh.
Also, it was provided that if premium is payable for more than one life insurance policy, other than a ULIP , issued on or after Apr 1, 2023 then the exemption shall be available only with respect to such policies where the aggregate premium does not exceed ₹ 5 lakh for any of the previous years during the term of any of those policies.
These exceptions do not apply to any sum received on the death of a person.
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