As per Section 10 (10D)

Following amount received from insurance company is exempt from Income tax

Any amount received on death by legal heirs

Fully exempt without condition


Any amount received on other than death,

Exempt if insurance premium is upto certain percentage of sum insured as follows

Policy Issued from

Premium as a % of Sum assured

from 1/04/2003 to 31/3/2012)


20% for all

After 31/3/2012


(15% in case of disabled persons as per section 80DDB or Section 80U)




When is TDS under Section 194DA not exempt.

  1. If insurance premium >10%/15%/20%
  2. Sum received under a Keyman insurance policy; or
  3. Any sum received under sub-section (3) ofsection 80DD or sub-section (3) of section 80DDA (i.e. any sum received by person maintaining)

In this case, TDS is now applicable u/s 194DA at 2% 1% (New Amendment from 1-6-2016)
  if amount paid is 100000 or more (No TDS up to 99,999) 

Note;- Insurance Company will deduct TDS @ 10% on such amount.

Policy taken on

% of  Sum Assured

Permissible Limit

Sum Received

Whether TDS applicable




4.5 lacs

Since amount received is not less than 1 lacs,


% of Sum Assured>10%.

Income is not exempt

TDS is applicable @ 2%





2.2 lacs

Since % of  Sum Assured is less than 20%.income is exempt

TDS is not applicable






% of capital assured >20%

Income is taxable


However amount received is less than 100000

Hence no TDS






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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.