The Union Budget for the fiscal year 2024-25 was presented by the honourable finance minister on July 23. The new TDS rules on life insurance have got a significant place on the list of changes made related to the insurance sector.
This post will help you understand the intricacies of this taxation system and its effect on life insurance buyers.
Are you wondering what TDS is and how does TDS work in Life Insurance? TDS stands for Tax Deducted at Source. It is a direct tax that is deducted by the payer from the total amount of payment.
The nature of payments from which TDS is collected varies, however, in life insurance plans, this tax is particularly deducted from insurance policy payouts, bonuses and commissions charged by insurance brokers or agents.
The Union Budget 2024 has brought some changes in the rates of TDS to be charged on payments related to life insurance. The table shown below includes the latest TDS rates applicable to life insurance policies.
| Section | Type of Payment | Present TDS Rate | Proposed TDS Rate | With Effect From |
|---|---|---|---|---|
| Section 194D | Payment of insurance commission in case of a person other than company | 5% | 2% | 1st April 2025 |
| Section 194DA | Payment in respect of life insurance policy | 5% | 2% | 1st October 2024 |
The proposal of lowering the rates of TDS applicable on payments related to life insurance has made it possible for life insurance buyers to receive higher payouts for the same life insurance plan.
The change of TDS rates from 5% to 2% is especially beneficial for policyholders in many ways as the reduced rate of tax results in better cash flow, which in turn, promotes smart financial habits like saving and investing.
Every year, the Union Budget is presented by the Government of India to highlight the source of expenditure and revenues in the country. This year, major modifications have been made with regard to TDS rates.
The new TDS rules proposed in the budget include a drop in the rate of Tax Deducted at Source on life insurance plans. Considering this favourable change of lowered taxes on life insurance, it is high time to buy a life insurance policy from PNB MetLife.
We, at PNB MetLife, have a gamut of life insurance plans that offer combined benefits like tax savings and life coverage throughout the policy term.
You can claim an income tax exemption of up to ₹1,50,000 on the life insurance premiums you pay for your policy.
While you cannot avoid paying TDS, you can claim tax deductions by considering solutions for tax planning for salaried employees.
You can make use of Sections like 80C and 80D of the Income Tax Act, 1961 and claim deductions on your taxable income.
No, there is no TDS on insurance premium for life insurance.
Piyush Kataria, SEO Manager at PNB MetLife, is a seasoned digital marketing strategist with over a decade of experience in optimizing websites for search engines. His expertise extends to keyword research, content strategy, technical SEO, and link building, all of which have been instrumental in driving organic traffic growth at PNB MetLife. With a strong foundation in life insurance, Piyush leverages his industry knowledge to create targeted and effective SEO campaigns.
Sakshi Malhotra is a seasoned marketing professional associated with the Life Insurance industry since 2007. At PNB MetLife, she heads Digital Marketing and Direct to Customer line of business. She is responsible for driving effective customer engagement through the company’s website and social media channels. In addition, she drives customer online buying journeys to help them buy the right product.
Disclaimer:
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
PNB MetLife India Insurance Company Limited
Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
IRDAI Registration number 117 | CIN U66010KA2001PLC028883
For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.
Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.
Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time.
The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
Call us Toll-free at 1-800-425-6969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra.
| Beware of Spurious Phone Calls and Fictitious / Fraudulent Offers! IRDAI or its officials is not involved in activities like selling insurance policies, announcing bonus or investments of premium. Public receiving such phone calls are requested to lodge a police complaint. |
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