An individual will have to pay tax on the maturity amount of life insurance policies where the aggregate annual premium exceeds Rs.5 lakh, according to a Budget proposal presented on Wednesday.
Finance Minister Nirmala Sitharaman in the Union Budget proposed "to provide that where an aggregate of premium for life insurance policies (other than ULIP) issued on or after April 1, 2023, is above Rs. 5 lakhs, income from only those policies with aggregate premium up to Rs. 5 lahks shall be exempt".
This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till March 31, 2023, she said.
As per the Budget proposal, maturity proceeds of all life insurance policies (other than unit-linked insurance policies or ULIPs) that are issued after April 1, 2023, and have an annual premium of more than Rs. 5 Lakh will now be taxable.
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