As per section 10(10D) of income tax act, any amount received under a life insurance policy, including bonus is exempt from tax. However, following receipts would be subject to tax:
- Any sum received under sub-section (3) of section 80DD of income tax act; or
- Any sum received under Key man insurance policy; or
- Any sum received in respect of policies issued on or after 01.04.2013, in respect of which the amount of premium paid on such policy in any financial year exceeds 20% (10% in respect of policy taken on or after 01.04.2012) of the actual capital sum assured; or
- Any sum received for insurance on life of specified person (issued on or after 01.04.2013) in respect of which the amount of premium exceeds 15% of the actual capital sum assured (taxability of life insurance maturity amount).
* Any person who is – (Taxability of life insurance maturity amount)
- A person with disability or severe disability specified under section 80U of income tax act; or
- suffering from disease or ailment as specified in the rule made under section 80DDB of income tax act.
- Following points should be noted in this regard:
- Exemption is available only in respect of amount received from life insurance policy (taxability of life insurance maturity amount).
- Exemption under section 10(10D of income tax act is unconditionally available in respect of sum received for a policy which is issued on or before 31.03.2013.
- Amount received on the death of the person will continue to be exempt without any Term and condition.