Section 10 (10D) of the Income-Tax Act exempts the money received from a life insurance policy, including bonus, from tax, provided the premium doesn’t exceed 10 per cent of the sum assured. In Finance Act 2021 (starting from February 1, 2021), the government had taken away the tax exemption on unit-linked insurance policies (Ulips) if premium exceeds Rs 2.5 lakh. Budget 2023 has proposed that starting from April 1, income from insurance policies (other than Ulips) whose premium (or aggregate premium for several policies) exceeds Rs 5 lakh in a year will be taxed at the slab rate. Death benefit will remain tax exempt.
