Tax Deduction at Source on Life Insurance Payouts
So the New Finance Bill of 2015 has introduced a 2% TDS on maturity of your life insurance policy. Who is this applicable to Policy holders holding a life insurance policy where the premium paid in a year exceeds 10% of the sum assured if policy issued after 1st April 2012. (20% if policy issued before that date) .Sec 10(10D) of Income Tax Act 1961 Why Many assessees even though liable to pay tax on such proceeds would not disclose such income in their tax returns thus forcing the Income Tax Department to bring in a provision to plug this gap. When applicable from 1st Oct 2014 Who deducts The insurance company Exemptions available If the payout is less Rs 1 lac in aggregate in a year , the insurer will not deduct TDS on that amount, ie you will receive the full proceeds in that year. However you have to show such proceeds in your tax return for the year if premium paid exceeds 10%. Example of exemption If A took a life policy with sum assured of Rs 10,00...