New Insurance Premium Rules People who have taken an insurance policy may now have to pay tax on the premium received on its maturity. The tax rules related to this have been changed in the budget.
If you have taken an insurance policy to save tax, then you may not get the benefit of it. Budget 2023 has removed the tax benefits of savings insurance schemes issued on or after April 1, 2023. This includes insurance policies whose annual premium is more than Rs 5 lakh. Simply put, the income of an insurance policy with a total premium of up to Rs 5 lakh will be exempt.
what is the new rule
Under the new rule introduced in the budget, if a person takes a life insurance policy after March 31 and the premium received from it exceeds Rs 5 lakh on maturity, then the income from the policy will be taxed. However, this limit will be applicable only on the first year’s premium and will not have any effect on renewal.
These policies will not be affected
Presenting the budget, Finance Minister Nirmala Sitharaman said that tax exemption will continue to be available on the premium received on some insurance policies as before. In this, tax exemption on the policy premium received on death will be as before. Also, the new income tax rule will not apply to ULIPs (Unit Linked Insurance Plans).
impact on insurance companies
It is being said that due to this new rule in the budget, its effect will be seen on the insurance companies. There is likely to be a 10-12 per cent impact on the out top line. And if nothing is done by insurance companies to mitigate the impact of the change, the impact on the bottom line is likely to be around 5 percent.
In this, insurance companies like HDFC Life, SBI Life Insurance, ICICI Prudential Life Insurance Company, Life Insurance of India, General Insurance Corp and Max Financial have started showing the impact. As soon as the budget comes, a decline is being seen in their shares.
