New financial year brings change for life insurance

As of today, 1st April 2023, the start of the new financial year, several income tax rules are changing in accordance with the proposals passed by the parliament through the Finance Bill based on the Union Budget 2023.

One of the changes is that only the proceeds from life insurance policies with an annual premium exceeding ₹5 lakh will be taxable. This change will take effect from tomorrow and does not apply to all life insurance policies, but only to those with an annual premium exceeding ₹5 lakh.

The Union Finance Minister Nirmala Sitharaman proposed this change in the Union Budget 2023, clarifying that policies issued on or after 1st April, 2023 with an aggregate premium exceeding ₹5 lakh will be taxable, but those with an aggregate premium up to ₹5 lakh will be exempt.

However, this change will not affect the tax exemption provided for the amount received on the death of the person insured, and it will not apply to insurance policies issued before 31st March, 2023.

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