Finance Minister Arun Jaitley did not announce big-ticket proposals for the life insurance sector, but he did dole out some minor tax reliefs.
The rate of tax deducted at source (TDS) on life insurance policies where maturity proceeds are taxable has been halved from 2% to 1%. Under section 194DA, TDS is applicable on all taxable payments made to them if the total amount exceeds Rs 1 lakh. "The move will lower the TDS burden of some policyholders," said Vaibhav Sankla, director of tax consulting firm H&R Block.
Under section 10 (10D), maturity proceeds received under a life insurance policy are exempt from tax. However, the benefit is not extended to policies where the annual premium exceeds 10% (20% in case of policies sold prior to April 2012) of the sum assured.
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