The government’s move towards removal of the exemption on income from insurance policies implies that individuals can’t think about insurance just as a tool to save tax anymore.
Among the surprises in this year’s Union Budget was the finance minister’s decision to remove the exemption on income received from traditional insurance policies where the premium is over Rs 5 lakh. Now, the removal of the exemption only applies on policies that have been purchased on or after 1 April 2023, but what’s important to note is that whether you buy one policy with a premium in excess of Rs 5 lakh, or buy multiple life insurance policies where the total premium paid exceeds Rs 5 lakh, the sum you receive on maturity will not be exempt from tax. …
Lavanya Mohan is a chartered accountant and writer from Chennai.
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