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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

10%

(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

1.4.2012

125000/400000=31.25%

10%

4.5 lacs

Since amount received is not less than 1 lacs,

And

% of Sum Assured>10%.

Income is not exempt

TDS is applicable @ 2%

1.4.2010

35000/200000

=17.5%

20%

2.2 lacs

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

TDS is not applicable

1.4.2010

19000/90000=

21.11%

20%

95000

% of capital assured >20%

Income is taxable

 

However amount received is less than 100000

Hence no TDS

 

 

 

 

 

  1. Income Tax
  2. Tax Deducted at Source (TDS)
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
  • mohd afridi's image

     

           1-- salary person par Kaise TDS deduct hoga ?

     
            2--EPF par TDS kaise deduct hoga ?
     
            3--Contractor's ka TDS kaise deduct hoga ?
     
            4--These type's all nature of payment give me Example ?
     
             exp--Contractor, bank,rent, etc.
     
    plz give me Answer.
    View answer
  • Santosh Kumar's image
    If I paid a single premium of 40,000 in 2005 for 10 year and U got 120,000 in 2015. Insurance company has already deducted 2% TDS. My income comes under 30% tax slab. I should pay rest 28% tax on whole 120,000 or 80,000 (toal rcvd - premium paid)?
    View answer
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