24/01/2017
TDS U/s 194DA on Life
Insurance Proceeds
TDS
Under Section 194DA on Life Insurance Proceeds
As per
section 194DA of the Income Tax Act of 1961, life insurance companies shall now
deduct TDS, if the amount paid on your life insurance policy, including bonus,
exceeds Rs. 1 lakh in a financial year.
The
section states that ‘the person responsible for paying to a resident any sum
under a life insurance policy, including the sum allocated by way of bonus on
such policy, (except life insurance policies which are exempted under section
10(10D)) shall deduct TDS, if the amount paid during the financial year exceeds
Rs.1 lakh’.
TDS
will not be applicable in case of death claim payouts.
TDS U/s
194DA is applicable to:
1. The policies where the sum
assured is less than 5 times of the premium paid for policies issued on or
before 31stMarch 2012 or where the sum assured is less than 10 times
of the premium paid for policies issued on or after 1stApril 2012.
2. All policy related payouts such
as Partial Withdrawal, Surrender, Maturity, etc, if the payout is above
Rs.100,000 within the same financial year.
TDS
rate will be applicable as per the prevailing tax laws.
Customer
will be given a TDS certificate of tax deducted.
If the
policy payout is taxable and the person (non corporate) is non-resident, then
effective rate of TDS under section 195 of Income Tax Act will be applicable.
|
About the author
RAHUL AGRAHARI
ACCOUNTS AND TAX CONSULTANTS
|
Print