In Budget 2023, the insurance sector has suffered a major setback. Now the income from the insurance policy has been brought under the tax net. However, its limit is 5 lakhs. If the annual premium is more than 5 lakhs, then that income will be taxed.
In Budget 2023, tax was announced on insurance income became taxable. If the annual premium of your insurance is more than 5 lakhs, then the income from it will be taxed. Till now the regular income from insurance was completely tax free. HNI i.e. High Net Worth Individuals used to get the benefit of this. After the budget announcement, these HNIs will get only limited benefit on the income from insurance. This rule will be applicable from 1 April 2023.
The old rule will remain in force till March 31
In her budget address in the House, Finance Minister Nirmala Sitharaman said that if an individual deposits more than 5 lakh premium in a financial year, then the income from it will be taxed. ULIP plans are not included in this. This rule will not apply to the insurance policy which will be issued till March 31, 2023.
As per the current rules, the amount received by the nominee on the death of the insurance holder is completely tax free. This facility will continue even further. Explain that under section 10(10)D, tax benefit is available on maturity of insurance. As we know, death benefit is completely tax free. If the policy holder gets the benefit of maturity, then under this section, if the premium amount is up to 10% of the sum assured, then maturity will be tax free. If the premium amount is more then maturity will not be tax free.
This limit including all insurance policy premiums
According to experts, the limit of 5 lakhs is for all insurance policies. If an insured person has bought different policies and his overall premium exceeds 5 lakh crores, then this rule will be applicable. Keep in mind that the premium for the ULIP plan will not be included in this. In Budget 2021, the ULIP plan was brought under the tax net. Tax is applicable if the annual premium is more than 2.5 lakhs. Capital gains tax is applicable on the maturity amount under section 112A.
Insurance stocks fell up to 11 percent
After this announcement, there was a huge fall in the stocks of insurance companies today. SBI Life registered a huge decline of 9 per cent, LIC India by 8.4 per cent, HDFC Life by 10.91 per cent, ICICI Prudential by 11.15 per cent.
