TaxTMI 
TaxTMI 
Guidelines under Clause (10D) of section 10 of the Income-Tax Act, 1961.
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....e for any of the previous years during the term of such policy exceeds Rs 5,00,000 [sixth proviso]; (ii) if premium is payable for more than one life insurance policy, other than a unit linked insurance policy, issued on or after 01.04.2023, the exemption under the said clause shall be available only with respect to such policies where the aggregate premium does not exceed Rs 5,00,000 for any of the previous years during the term of any of those policies [seventh proviso]; (iii) the sixth and seventh provisos shall not apply in case of any sum received on the death of a person [eighth proviso] II. inserted a new clause (xiii) in sub-section (2) of section 56 to provide that where any sum is received, including the amount allocated by way of bonus, at any time during a previous year, under a life insurance policy, other than the sum.- a. received under a unit linked insurance policy, or b. being the income referred to in clause (iv) of sub-section 2, which is not to be excluded from the total income of the previous year in accordance with the provisions of Clause (10D) of section 10, the sum so received as exceeds the aggregate o....
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....ovisions of said clause. The same are explained by way of examples of different situations:- 4.2 Situation1: No consideration is received by the assessee on any eligible life insurance policies during any previous year preceding the current previous year or consideration has been received on such eligible life insurance policies but has not been claimed exempt. The exemption under Clause (10D) of section 10 of the Act shall be determined as under: i. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and the amount of premium payable on such eligible life insurance policy does not exceed Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policy, such consideration shall be eligible for exemption under the said clause (10D) subject to fulfilment of other conditions; ii. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and the amount of premium payable on such eligible life insurance policy exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life in....
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....lauses (a) to (d) of said clause (10D): ii. If the assessee has received consideration, during the current previous year, under one eligible life insurance policy only and aggregate amount of premium payable on such eligible life insurance policy and old eligible life insurance policies exceeds Rs 5,00,000 for any of the previous year during the term of such eligible life insurance policy, the consideration under such eligible life insurance policy shall not be eligible for exemption under the said clause (10D); iii. If the assessee has received consideration, during the current previous year, under more than one eligible life insurance policies and aggregate of the amount of premium payable on such eligible life insurance policies and old eligible life insurance policies does not exceeds Rs 5,00,000 for any of the previous years during the term of such eligible life insurance policies, such consideration shall be eligible for exemption under the said clause (10D) provided it is not excluded under sub-clauses (a) lo (d) of said clause (10D); iv. If the assessee has received consideration, during the current previous year, under more than one eligible life....
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....not be exempt under Clause (10D) of section 10 of the Act as per the provisions of sixth proviso since the annual premium payable on the policy exceeded Rs 5,00,000. Example 3: The assessee has the following policy which satisfies all the conditions laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability where of is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2033-34. Life Insurance Policy A Date of issue 01.04.2023 Annual premium (Rs) 5,00,000 Sum assured (Rs) 50,00,000 Consideration received as on 01.11.2033 on maturity 52,00,000 Taxability as per sixth proviso to Clause (10D) of section 10 of the Act: The consideration received will be exempt under Clause (10D) of section 10 of the Act as the provisions of sixth proviso will not apply since the annual premium payable on the policy does not exceed Rs 5.00.000 in any of the previous years during the term of the policy. Example 4: The assessee has the....
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....nsurance policy "A", life insurance policy "B" and life insurance policy "C exceeds Rs 5,00,000 during the term of these policies. • However, the consideration received under life insurance policies "A" and "B" shall be exempt under Clause (10D) of section 10 of the Act, since aggregate of annual premium payable for these two policies does not exceed Rs 5,00,000 for any previous year during the term of these two policies. Example 6: The assessee has the following policies all of which satisfy all the conditions laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2033-34. Life Insurance Policy X A B C Date of issue 01.04.2022 01.04.2023 01.04.2023 01.04.2023 Annul premium (Rs) 5,00,000 1,00,000 3,50,000 6,00,000 Sum assured (Rs) 50,00,000 10,00,000 35,00,000 60,00,000 Consideration received as on 01.11.2032 on ....
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....nce policies "A", "B" and "C" will not be exempt under Clause (10D) of section 10 of the Act as per the provisions of seventh proviso since aggregate of the annual premium payable for these three life insurance policies and life insurance policy "X" exceeds Rs 5,00,000 for the previous year 2023-24 to 2033-34 which fall under the tenure of these policies. The consideration under life insurance policy "A" will also not be eligible for exemption under the said clause as the aggregate of annual premium of life insurance policies "X" and "A" exceeds Rs 5,00,000. Example 8: The assessee has the following policies all of which satisfy all the conditions laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2043-44. Life Insurance Policy X A Date of issue 01.04.2023 01.04.2034 Annual premium (Rs) 5,00,000 5,00,000 Previous years for which premium is paid 2023-2....
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....X" and "B" together did not exceed Rs 5,00,000 for any of the previous years during the term of life insurance policies "X" and "B". • Here instead of life insurance policy "B", we could have taken life insurance policy "A" as the aggregate of annual premium payable for life insurance policies "X" and "A" is also less than Rs 5.00,000 during the term of these life insurance policies. However, since including life insurance policy "B" instead of life insurance policy "A" is more beneficial to the assessee, life insurance policy "B" has been considered for exemption. Example 10: The assessee has the following policies all of which satisfy all the conditions laid down in Clause (10D) of section 10 of the Act (other than the conditions provided under the sixth and seventh proviso of the said clause, applicability whereof is being explained in the example). The assessee did not receive any consideration under any other eligible life insurance policy in earlier previous years preceding the previous year 2033-34. (It needs to be specified that consideration under life insurance policy "X" has not been claimed exempt) Life Insurance Policy X A B C Date ....
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....0,000 20,00,000 20,00,000 30,00,000 60,00,000 Consideration received on 01.07.2033 12,00,000 Consideration received on maturity as on 01.11.2034 24,00,000 Consideration 01.11.2035 on maturity 24,00,000 36,00,000 70,00,000 Taxability as per seventh proviso to Clause (10D) of section 10 of the Act: • The surrender value of life insurance policy "X" and consideration received under life insurance policy "Y" on maturity will be exempt under Clause (10D) of section 10 of the Act since the annual premium does not exceed Rs 5,00.000 during the term of these policies. • The consideration received under life insurance policies "A", "B" and "C" will be taxable under Clause (10D) of section 10 of the Act as per the provisions of seventh proviso to the said clause (10D) since aggregate of the annual premium payable for the life insurance policies "X" and "Y" for the previous year 2023-24 to 2033-34 was Rs 4,00,000. If the annual premium of life insurance policies "A" or "B" or "C" is added then the aggregate of the premium will exc....
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....n received on maturity as on 01.11.2034 12,00,000 18,00,000 34,00,000 Taxability as per fifth and seventh proviso to Clause (10D) of section 10 of the Act: • As per the fifth proviso, the surrender value of unit linked insurance policy ''X" and consideration received under unit linked insurance policy "Y" on maturity will be exempt under Clause (10D) of section 10 of the Act since the annual premium does not exceed Rs 2,50,000 during the term of these policies. • Further, the consideration received under the life insurance policy "A" during the previous year 2033-34 shall be exempt under Clause (10D) of section 10 of the Act and will become old eligible life insurance policy for which exemption has been claimed. Then, for the previous year 2034-35, the consideration for life insurance policy "C" only shall be exempt under Clause (10D) of section 10 of the Act as the sum of premium of life insurance policies "A" and "C" does not exceed Rs 5,00,000 in any of the previous years during the term of these policies. The consideration for life insurance policy "B" is not exempt since sum of premium of life insurance policies....