- Date : 02/02/2023
- Read: 2 mins
Tax payable over Rs. 5 lacs annual life insurance premium.
You must pay tax on your life insurance premium if the annual premium is over Rs. 5 lacs from the new financial year. The Finance Minister announced the move in her Budget speech in 2023. She said the new rule would be effective from April 1, 2023. Nirmala Sitharaman clarified the new rule would not affect the premium on death benefits. It will remain exempted from tax.
Also Read: ULIP taxability under 2022 norms.
ULIPs Unaffected
Nirmala Sitharaman also announced that the new income tax rule would not affect ULIPs (Unit Linked Insurance Plans). She added that income from policies up to Rs. 5 lacs aggregate of premium would be exempt, and even the insurance policies issued by March 31, 2023, will not be affected.
Expert Talk
Optima Money Managers, CEO, and MD, Pankaj Mathpal, said while trying to decode the announcement that the previous budget said the tax benefit on ULIP premium over Rs. 2.5 lacs annually would be taxable. However, the other life insurance offerings remained untouched. However, the 2023 Budget covered other life insurance offerings by adding an income tax on the benefits on premiums over Rs. 5 lacs annually. However, the ULIP limit stays untouched this time around. In a nutshell, ULIP will be exempted till Rs. 2.5 lacs, and life insurance premiums will be exempted up to Rs. 5 lacs.
Also Read: Everything you need to know about ULIPs.
Conclusion
Experts say that individuals investing in life insurance can now get tax exemption on their proceeds up to Rs. 7.5 lacs annually if they shell out Rs. 2.5 lacs for ULIPs and Rs. 5 lacs for other plans under life insurance.
