Union Budget 2025-26 (Full) + Finance Bill, 2025

III. Exemption on life insurance policy from IFSC Insurance offices

Clause (10D) of section 10 provides exemption to sum received under a life insurance policy including the sum allocated by way of bonus on such policy, subject to the conditions specified therein.

The said provisions are also applicable to insurance policies issued by IFSC Insurance Offices.

2. Provisos (fourth, fifth, sixth and seventh provisos) to the said clause, inter alia, provide that the exemption under the said clause is not available if annual amount of premium or aggregate of premiums payable is above Rs. 2.5 lakhs for unit linked insurance policies, and Rs. 5 lakhs for life insurance policies other than unit linked insurance policies.

3. In order to provide parity to non-residents availing life insurance from insurance office in IFSC vis a vis other foreign jurisdiction, it is proposed to amend the clause (10D) of section 10 so as to provide that proceeds received on life insurance policy issued by IFSC insurance intermediary office shall be exempted without the condition related to the maximum premium payable on such policy as mentioned above.

4. These amendments will take effect from the 1st day of April, 2025.

[Clause 6]

 

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Full Text:

Union Budget 2025-26 (Full) + Finance Bill, 2025

Life insurance exemption extended to IFSC-issued policies without premium cap, improving parity for non-residents and clarifying scope. Exemption for amounts received under life insurance policies, including bonuses, will expressly apply to policies issued by IFSC insurance offices; the proposed amendment removes the existing premium-cap condition for IFSC-issued policies to provide parity for non-resident policyholders, while leaving other exemption conditions intact, effective 1 April 2025.