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TMI BlogGuidelines under Clause (10D) of section 10 of the Income-Tax Act, 1961.X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,00,000 [sixth proviso]; (ii) if premium is payable for more than one life insurance policy, other than a unit linked insurance policy, issued on or after 01.04.2023, the exemption under the said clause shall be available only with respect to such policies where the aggregate premium does not exceed Rs 5,00,000 for any of the previous years during the term of any of those policies [seventh proviso]; (iii) the sixth and seventh provisos shall not apply in case of any sum received on the death of a person [eighth proviso] II. inserted a new clause (xiii) in sub-section (2) of section 56 to provide that where any sum is received, including the amount allocated by way of bonus, at any time during a previous year, under a life insurance policy, other than the sum.- a. received under a unit linked insurance policy, or b. being the income referred to in clause (iv) of sub-section 2, which is not to be excluded from the total income of the previous year in accordance with the provisions of Clause (10D) of section 10, the sum so received as exceeds the aggregate of the premium paid, during the term of such life insurance policy, and not claimed as deduction in any other provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any eligible life insurance policies during any previous year preceding the current previous year or consideration has been received on such eligible life insurance policies but has not been claimed exempt. The exemption under Clause (10D) of section 10 of the Act shall be determined as under: i. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and the amount of premium payable on such eligible life insurance policy does not exceed Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policy, such consideration shall be eligible for exemption under the said clause (10D) subject to fulfilment of other conditions; ii. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and the amount of premium payable on such eligible life insurance policy exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policy, such consideration shall not be eligible for exemption under the said clause (10D); iii. If the assessee has received consideration, during the current pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remium payable on such eligible life insurance policy and old eligible life insurance policies exceeds Rs 5,00,000 for any of the previous year during the term of such eligible life insurance policy, the consideration under such eligible life insurance policy shall not be eligible for exemption under the said clause (10D); iii. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and aggregate of the amount of premium payable on such eligible life insurance policies and old eligible life insurance policies does not exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policies, such consideration shall be eligible for exemption under the said clause (10D) provided it is not excluded under sub-clauses (a) lo (d) of said clause (10D); iv. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and aggregate of the amount of premium payable on such eligible life insurance policies and old eligible life insurance policies exceeds Rs 5,00,000 for any of the previous years during the term o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability where of is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2033-34. Life Insurance Policy A Date of issue 01.04.2023 Annual premium (Rs) 5,00,000 Sum assured (Rs) 50,00,000 Consideration received as on 01.11.2033 on maturity 52,00,000 Taxability as per sixth proviso to Clause (10D) of section 10 of the Act: The consideration received will be exempt under Clause (10D) of section 10 of the Act as the provisions of sixth proviso will not apply since the annual premium payable on the policy does not exceed Rs 5.00.000 in any of the previous years during the term of the policy. Example 4: The assessee has the following policies all of which satisfy all the conditions laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the term of these two policies. Example 6: The assessee has the following policies all of which satisfy all the conditions laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2033-34. Life Insurance Policy X A B C Date of issue 01.04.2022 01.04.2023 01.04.2023 01.04.2023 Annul premium (Rs) 5,00,000 1,00,000 3,50,000 6,00,000 Sum assured (Rs) 50,00,000 10,00,000 35,00,000 60,00,000 Consideration received as on 01.11.2032 on maturity 60,00,000 Consideration received as on 01.11.2033 on maturity 12,00,000 40,00,000 70,00,000 Taxability as per seventh proviso to Clause (10D) of section 10 of the Act: * The consideration under life insurance policy "X" will be exempt under Clause (10D) of section 10 of the Act as the policy has been issued before 01.04.2023 and it is not covered by recently introduced provisions. * The consideration received under life insurance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2043-44. Life Insurance Policy X A Date of issue 01.04.2023 01.04.2034 Annual premium (Rs) 5,00,000 5,00,000 Previous years for which premium is paid 2023-24 to 2033-34 2034-35 to 2047-48 Sum assured (Rs) 50,00,000 50,00,000 Consideration received as on 01.11.2043 on maturity 52,00,000 Consideration received as on 01.11.2048 on maturity 52,00,000 Taxability as per seventh proviso to Clause (10D) of section 10 of the Act: The consideration under life insurance policies "X" and "A" will be exempt for the previous year 2043-44 and previous year 2048-49 respectively, under Clause (10D) of section 10 of the Act since the aggregate of the annual premium payable for the life insurance policies "X" and "A" together did not exceed Rs 5,00,000 for any of the previous years during the term of life insurance policies "X" and "A". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2033-34. (It needs to be specified that consideration under life insurance policy "X" has not been claimed exempt) Life Insurance Policy X A B C Date of issue 01.04.2023 01.04.2024 01.04.2024 01.04.2024 Annual premium (Rs) 1,00,000 1,00,000 1,50,000 3,00,000 Sum assured (Rs) 10,00,000 10,00,000 15,00,000 30,00,000 Consideration received on maturity as on 01.05.2033 12,00,000 Consideration received as on 01.05.2034 on maturity 12,00,000 18,00,000 34,00,000 Taxability as per seventh proviso to Clause (10D) of section 10 of the Act: * The consideration under life insurance policy "X" was not claimed to be exempt under Clause (10D) of section 10 of the Act by the assessee therefore it is not covered within the definition of old eligible life insurance policies. * The consideration received under life insurance policies "B" and "C" will be exempt under Clause (10D) of section 10 of the Act. However, since aggregate of the annual premium payable for the life insurance policies "B" and "C" together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the premium will exceed Rs 5,00,000 for the previous year 2024-25 to 2033-34. * As per the provisions of seventh proviso, in case of multiple life insurance policies, the aggregate of the premium payable for all the policies which are claimed to be exempt under Clause (10D) of section 10 of the Act shall not exceed Rs 5,00,000 for any previous year during the term of any of those policies. Example 12: If in Example 11, the assessee does not claim exemption with respect to the surrender value of life insurance policy "X", then the consideration received under life insurance policy "Y" will be exempt for the previous year 2034-25 and the consideration received under life insurance policy "B" will be exempt for the previous year 2035-36 under Clause (10D) of section 10 of the Act. The exemption is restricted to life insurance policy "B" since the aggregate of the annual premium payable for the life insurance policies "Y" and "B" together did not exceed Rs 5,00,000 for any of the previous years during the term of life insurance policies "Y" or "B" and the assessee did not claim life insurance policy ''X" as exempt. Life insurance policy "B" is preferred in place of life i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, if the consideration from life insurance policy "A" was not claimed as exempt in previous year 2033-34, then the consideration from both the life insurance policies "B" and "C" shall be exempt under Clause (10D) of section 10 of the Act. Clarification on GST Component 5. In addition to the above, it is also clarified that the premium payable/ aggregate premium payable for a life insurance policy/ policies, other than a unit linked insurance policy, issued on or after the 1st day of April, 2023, for any previous year, shall be exclusive of the amount of the Goods and Service Tax payable on such premium. This can be explained by the following example: Life Insurance Policy A Date of issue 01.04.2023 Annual premium (Rs) 5,00,000 GST @4.5% of premium) 22,500 Total Premium Payable 5.22,500 Sum assured (Rs) 60,00,000 Consideration received as on 01.11.2033 on maturity 70,00,000 Clarity on premium of Term life insurance policy 6. It is further clarified that the provision of the sixth and seventh proviso of Clause (10D) of section 10 shall not be applicable in case of a term life insurance policy i.e. where sum under a life insurance policy is only paid to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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