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F. NO.370142/28/2023-TPL
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
***********
Circular No. 15 of 2023
Dated tbe 16th August, 2023
Sub: Guidelines under clause (lOD) of section 10 oftbe Income-tax Act. 1961- reg.
Clause (100) of section IO of the Income-tax Act, 1961 (the Act) provides for
income-tax exemption on any sum received under a life insurance policy, including the sum
allocated by way of bonus on such policy subject to certain exclusions.
2.
The Finance Act, 2023 (Finance Act), inter-alia,-
l.
amended clause (100) of section 10 of the Act by substituting the existing sixth
proviso with the new sixth, seventh and eighth provisos to, inter-alia, provide that:
(i) with effect from assessment year 2024-25, the sum received under a life
insurance policy, other than a unit linked insurance policy, issued on or after
the 151 day of April, 2023, shall not be exempt under the said clause if the
amount of premium payable 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 ofa person [eighth proviso]
I!.
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,-
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Circular No. 15 of 2023
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 (I OD) of section 10, the sum so received as exceeds the
aggregate ofthe premium paid, during the term of such life insurance policy, and not
claimed as deduction in any other provision of the Act, computed in the manner as
may be prescribed shall be chargeable to income-tax under the head
"Income from
other sources";
III.
inserted a sub-clause (xviid) in clause (24) of section 2 to provide that income shall
include any sum referred to in clause (xiii) of sub-section (2) of section 56.
2.1
It may be noted that Finance Act, 2021 had earlier inserted, fourth to seventh provisos
in clause (I OD) of section 10 to provide that the sum received under any unit linked insurance
policy [ULIPj (except any such sum received on the death of a person), issued on or after the
01.02.2021 shall not be exempt under said clause, if the amount of premium payable for any
of the previous years during the term of such policy exceeds Rs 2,50,000 (fourth proviso). It
was also provided that if the premium is payable for more than one UUPs, issued on or after
the 01.02.2021, the exemption under the said clause shall be available only with respect to
such policies where the aggregate premium does not exceed Rs 2,50,000 for any of the
previous years during the term of any of the policies (fifth proviso).
Issuance of Guidelines for removal of difficulties
3.
Ninth proviso to clause (I OD) of section 10 of the Act also empowers the Central
Board of Direct Taxes (Board) to issue guidelines, with the previous approval of the Central
Government, in order to remove any difficulty which arises while giving effect to the
provisions of the said clause. In exercise of the powers under this proviso, Board, with the
previous approval of the Central Government, hereby issues the following guidelines.
Guidelines
4.
In these guidelines:-
(i) "eligible life insurance policy" means any life insurance policy (other than unit linked
insurance policy) issued on or after 0 1.04.2023;
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Circular No. 15 of 2023
(ii) "consideration" means sum received (of any nature including bonus) under an eligible
life insurance policy
(iii)"current previous year" means the previous year in which consideration is received
and its taxability is being examined.
4.1
Consideration received during the prevIous year under an eligible life insurance
policy shall be exempt or not exempt under clause (100) of section 10 of the Act, subject to
the satisfaction of other provisions of said clause. The same are explained by way of
examples of different situations:-
4.2
Situationl: 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 (100) 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 (100) 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 insurance policy, such consideration shall not be eligible
for exemption under the said clause (100);
III.
If the assessee has received consideration, during the current previous year, under
more than one eligible life insurance policies and the aggregate of the amount of
premium payable on such eligible life insurance policies does not exceed 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 (100) subject
to fulfilment of other conditions;
IV.
If the assessee has received consideration, during the current previous year, under
more than one eligible life insurance policies and the aggregate of the amount of
premium payable on such eligible life insurance policies exceeds Rs 5,00,000 for any
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Circular No. 15 of 2023
of the previous years during the term of such eligible life insurance policies, the
consideration under only such eligible life insurance policies shall be eligible for
exemption under the said clause (IOD) where aggregate of the amount of the premium
payable does not exceed Rs 5,00,000 for any of the previous years during their term
(Refer Examples) subject to fulfilment of other conditions.
4.3
Situation 2: Consideration has been received by the assessee under anyone or more
eligible life insurance policies during any previous year preceding the current previous year
and it has been claimed exempt under clause (lOD) of section 10 of the Act. Such eligible life
insurance policies are referred as "old eligible life insurance policies" in this paragraph and
corresponding examples and reference to eligible life insurance policies in this paragraph and
corresponding examples shall not include old eligible life insurance policies. The exemption
under clause (lOD) of section \0 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 aggregate amount of premium payable on
such eligible life insurance policy and old eligible life insurance policies does not
exceed 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 be
eligible for exemption under the said clause (I OD) provided it is not excluded under
sub-clauses (a) to (d) of said clause (lOD);
11.
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 (lOD);
111.
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) to (d) of said clause (lOD);
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Circular No. 15 of 2023
iv.
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 exceeds Rs 5,00,000 for any of the previous years during the term
of such eligible life insurance policies, consideration under only such eligible life
insurance policies shall be eligible for exemption under the said clause (100) where
aggregate amount of premium along with the aggregate amount of premium of old
eligible life insurance policies does not exceed Rs 5,00,000 for any of the previous
years during the term of any of such eligible life insurance policies (Refer examples)
provided it is not excluded under sub-clauses (a) to (d) of said clause (100).
4.4
The above guidelines are explained with the help of the following examples:
Example 1:
The assessee has the following policy which satisfies all the conditions laid down in clause
(100) of section 10 ofthe Act (other than the conditions provided under the sixth and seventh
proviso of the said clause, applicability whereof is being explained in the example).
Life Insurance Policy
A
Date of issue
01.04.2013
Annual premium (Rs)
6,00,000
Sum assured (Rs)
60,00,000
Consideration received as on 01.11.2023 on maturity
70,00,000
Taxability as per sixth proviso to clause (10D) of section 10 of the Act:
The sum received on maturity will be exempt under clause (lOD) of section 10 of the Act as
the policy has been issued before 01.04.2023 and accordingly not covered by the 6th to 8th
provisos to the said clause (10) of section 10 of the Act, as substituted by Finance Act, 2023.
Example 2:
The assessee has the following policy which satisfies all the conditions laid down in clause
(lOD) 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
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Circular No. 15 of 2023
assesse 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)
6,00,000
Sum assured (Rs)
60,00,000
Consideration received as on 01.11.203300 maturity
70,00,000
Taxability as per sixth proviso to clause (tOD) of section 10 of the Act:
The consideration received will not be exempt under clause (IOD) 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
(I OD) of section 10 of the Act (other than the conditions provided under the sixth and seventh
proviso of the said clause, applicability whercof 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 (100) 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.
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Circular No. 15 of 2023
Example 4:
The assessee has the following policies all of which satisfy all the conditions laid down in
clause (100) 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
A
B
Date of issue
01.04.2023
01.04.2023
Annual premium (Rs)
4,50,000
5,50,000
Sum assured (Rs)
45,00,000
55,00,000
Consideration received as on 01.11.2033 on maturity
52,00,000
60,00,000
Taxability as per seventh proviso to clause (1OD) of sectiou 10 of the Act:
The consideration received under life insurance policy "8" will not be exempt under clause
(100) of section 10 of the Act as per the provisions of seventh proviso, since aggregate of the
annual premium payable for life insurance policy "A" and life insurance policy "8 " exceeds
Rs 5,00,000 during the term of these policies. However, the consideration received under life
insurance policy "A" shall be exempt under clause (100) of section 10 of the Act since its
annual premium does not exceed Rs 5,00,000 in any of the previous years during the term of
the policy.
Example 5:
The assessee has the following policies all of which satisfy all the conditions laid down in
clause (100) 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
A
B
C
Date of issue
01.04.2023
01.04.2023
01.04.2023
Annual premium (Rs)
1,00,000
3,50,000
6,00,000
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Circular No. 15 of 2023
Sum assured (Rs)
10,00,000
35,00,000
60,00,000
Consideration received as on 01.11.2033 on maturity
12,00,000
40,00,000
70,00,000
Taxability as per seventh proviso to clause (100) of section 10 of the Act:
•
The consideration received under life insurance policy "c" will not be exempt under
clause (100) of section 10 of the Act as per the provisions of seventh proviso since
aggregate of the annual premium payable for life insurance 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 (100) 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 (100) 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
Annual 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
60,00,000
01.11.2032 on maturity
Consideration
received
as
on
12,00,000
40,00,000
70,00,000
01.11.2033 on maturity
Taxability as per seventh proviso to clause (100) of section 10 of the Act:
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Circular No. 15 of 2023
•
The consideration under life insurance policy "X" will be exempt under clause (100)
of section 10 of the Act as the policy has been issued before 01.04.2023 and it is not
covered by recently introduced provisions.
•
The consideration received under life insurance policy "C" will not be exempt under
clause (I00) of section 10 of the Act as per the provisions of seventh proviso since
aggregate of the annual premium payable for life insurance policy "A", life insurance
policy "8 ' and life insurance policy "C" exceeds Rs 5,00,000 during the term of these
policies.
•
However, the consideration received under life insurance policy "A" and "8" shall be
exempt under clause (I00) 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 7:
The assessee has the following policies all of which satisfy all the conditions laid down in
clause (100) 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
01.04.2023
01.04.2024
01.04.2024
01.04.2024
Annual premium (Rs)
4,50,000
1,00,000
1,50,000
6,00,000
Sum assured (Rs)
40,50,000
10,00,000
15,00,000
60,00,000
Consideration
received
as
on
50,00,000
01.11.2033 on maturity
Consideration
received
as
on
12,00,000
18,00,000
70,00,000
01.11.2034 on maturity
Taxability as per seventh proviso to clause (100) of section 10 of the Act:
•
The consideration under life insurance policy "X" will be exempt for the previous
year 2033-34 under clause (100) of section 10 of the Act since the annual premium
does not exceed Rs 5,00,000.
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Circular No. 15 of 2023
•
The consideration received under life insurance policies "A", "8" and "e" will not be
exempt under clause (J 00) 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 (100) 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
2023·24 to 2033-34
2034-35 to 2047·48
Sum assured (Rs)
50,00,000
50,00,000
Consideration received as on 01.11.2043 on m·aturity
52,00,000
Consideration received as on 01.1 1.2048 on maturity
52,00,000
Taxability as per seventh proviso to clause (lOD) of section 10 of the Act:
The consideration under life insurance policies "X" and "A" will be exempt for the previous
year 2043-44 and previous year 2048-49 respectively, under clause (100) of section JO of the
Act since the aggregate of the annual premium payable for the life insurance policies "X" and
"A" together did not exceed Rs 5,00,000 for any of the previous years during the term of life
insurance policies "X" and "A",
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Circular No. 15 of 2023
Example 9:
The assessee has the following policies all of which satisfy all the conditions laid down in
clause (IOD) of section \0 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
01.04.2023
01.04.2024
01.04.2024
01.04.2024
Annual premium (Rs)
2,50,000
2,00,000
2,50,000
6,00,000
Sum assured (Rs)
25,00,000
20,00,000
25,00,000
60,00,000
Consideration received on maturity as
30,00,000
on 01.1 1.2033
Consideration
received
as
on
24,00,000
38,00,000
70,00,000
01.1 1.2034 on maturity
Taxability as per seventh proviso to clause (IOD) of section 10 of the Act:
o The consideration under life insurance policy "X" will be exempt under clause (100)
of section 10 of the Act for the previous year 2033-34 since the annual premium does
not exceed Rs 5,00,000.
o
The consideration received under life insurance policy "8" only will be exempt under
clause (IOD) of section 10 of the Act during the previous year 2034-35 while
consideration received under life insurance policies "A" and "C" will be taxable as
per the provisions of seventh proviso.
o
The exemption is restricted to consideration under life insurance policy "8" since
aggregate of the annual premium payable for the life insurance policies "X" and "8"
together did not exceed Rs 5,00,000 for any of the previous years during the term of
life insurance policies "X" and "8 ".
o
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 "8" instead of life insurance policy
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Circular No. 15 of 2023
"A" is more beneficial to the assessee, life insurance policy "8 " has been considered
for exemption.
Example 10:
The assessee has the following policies all of which satisfy all the conditions laid down in
clause (100) 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 of issue
01.04.2023
01.04.2024
01.04.2024
01.04.2024
Annual premium (Rs)
1,00,000
1,00,000
1,50,000
3,00,000
Sum assured (Rs)
10,00,000
10,00,000
15,00,000
30,00,000
Consideration received on maturity as
12,00,000
on 01.05.2033
Consideration
received
as
on
12,00,000
18,00,000
34,00,000
01.05.2034 on maturity
Taxability as per seventh proviso to clause (100) of section 10 of the Act:
•
The consideration under life insurance policy "X" was not claimed to be exempt
under clause (100) of section 10 of the Act by the assessee therefore it is not covered
within the definition of old eligible life insurance policies.
•
The consideration received under life insurance policies "8" and "e" will be exempt
under clause (100) of section 10 of the Act. However, since aggregate of the annual
premium payable for the life insurance policies "8" and "e" together did not exceed
Rs 5,00,000 for any of the previous years during the term of any of these life
insurance policies "8" or "e" and life insurance policy "X" was not claimed to be
exempt under clause (100) of section 10 of the Act, the consideration received under
life insurance policy "A" will be taxable as per the provisions of seventh proviso to
the said clause (100) of section 10 of the Act. It may again be stated that life
insurance policies "8" and "e" are considered for exemption instead of combination
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Circular No. 15 of 2023
of policies "A" and "B" or policies "A" and "C" as this combination (i.e. life
insurance policies "B" and "C") is more beneficial to the assessee.
Example 11:
The assessee has the following policies all of which satisfy all the conditions laid down in
clause (100) 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 2035-36 other than under life insurance
policies "X" and "Y".
Life
Insurance
X
Y
A
B
C
Policy
Date of issue
01.04.2023
01.04.2023
01.04.2024
01.04.2024
01.04.2024
Annual
2,00,000
2,00,000
2,00,000
3,00,000
6,00,000
premium (Rs)
Sum
assured
20,00,000
20,00,000
20,00,000
30,00,000
60,00,000
(Rs)
Consideratiun
received
on
12,00,000
surrender as on
01.07.2033
Consideration
24,00,000
received
on
maturity as on
01.11.2034
Consideration
24,00,000
36,00,000
70,00,000
received as on
01.11.2035
on
maturity
Taxability as per seventh proviso to clause (lOD) 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 (100) of section 10 of
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Circular No. 15 of 2023
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", "8 " and "C" will be
taxable under clause (100) of section 10 of the Act as per the provisions of seventh
proviso to the said clause (I OD) 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 "8" or "C" is
added then the aggregate of the premium will exceed Rs 5,00,000 for the previous
year 2024-25 to 2033-34.
•
As per the provisions of seventh proviso, in case of mUltiple life insurance policies,
the aggregate of the premium payable for all the policies which are claimed to be
exempt under clause (100) of section 10 of the Act shall not exceed Rs 5,00,000 for
any previous year during the term of any of those policies.
Example 12: If in Example II, the assessee does not claim exemption with respect to the
surrender value of life insurance policy "X", then the consideration received under life
insurance policy "Y" will be exempt for the previous year 2034-25 and the consideration
received under life insurance policy "8" will be exempt for the previous year 2035-36 under
clause (100) of section 10 of the Act. The exemption is restricted to life insurance policy "8"
since the aggregate of the annual premium payable for the life insurance policies "Y" and
"8" together did not exceed Rs 5,00,000 for any of the previous years during the term of life
insurance policies "Y" or "8" and the assessee did not claim life insurance policy "X" as
exempt. Life insurance policy "8" is preferred in place of life insurance policy "A" as it is
more beneficial to the assessee.
Example 13:
The assessee has the following life insurance
policies and unit linked
insurance policies (ULIPs) all of which satisfY all the conditions laid down in clause (100)
of section 10 of the Act (other than the conditions provided under the fourth, fifth, sixth and
seventh provisos 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 policies
or unit liked insurance policies in earlier previous years preceding the previous year 2033-34
other than under unit liked insurance policy "X" and under life insurance policy "A".
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Circular No. 15 of 2023
Life
Insurance
A
B
C
Policy
Unit
Linked
X
Y
Insurance Policy
Date of issue
01.04.2021
01.04.2023
01.04.2023
01.04.2023
01.04.2024
Annual
1,00,000
1,00,000
1,00,000
1,50,000
3,00,000
premium (Rs)
Sum
assured
10,00,000
10,00,000
10,00,000
15,00,000
30,00,000
(Rs)
Consideration
6,00,000
6,00,000
received
on
surrender as on
01.07.2033
Consideration
12,00,000
18,00,000
34,00,000
received
on
maturity as on
01.1 1.2034
Taxability as per fifth and seventh proviso to clause (IOD) of section 10 of tbe 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 (100) 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 (laD) 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 (100) of section I a 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 "8 " is not exempt since sum of premium of life insurance
policies "A", "8 " and "C" exceeds Rs 5,00,000 during the term of these policies. Life
insurance policy "C" is preferred over life insurance policy "8 " being more beneficial
15
Circular No. 15 of 2023
to the assessee. However, if the consideration from life insurance policy "A" was not
claimed as exempt in previous year 2033-34, then the consideration from both the life
insurance policies "8" and "e" shall be exempt under clause (IOD) of section 10 of
the Act.
Clarification on GST Component
5.
In addition to the above, it is also clarified that the premium payable/ aggregate
premium payable for a life insurance policy/ policies, other than a unit linked insurance
policy, issued on or after the I st day of April, 2023, for any previous year, shall be exclusive
of the amount of the Goods and Service Tax payable on such premium. This can be explained
by the following example:
Life Insurance Policy
A
Date of issue
01.04.2023
Annual premium (Rs)
5,00,000
,
GST (@4.5% of premium)
22,500
Total Premium Payable
5,22,500
Sum assured (Rs)
60,00,000
Consideration received as on 01.11.2033 on maturity
70,00,000
Clarity on premium of Term life insurance policy
6.
It is further clarified that the provision of the sixth and seventh proviso of clause
(lOD) of section 10 shall not be applicable in case of a term life insurance policy i.e. where
sum under a life insurance policy is only paid to the nominee in case of the death of the
person insured during the term of the policy and no amount is paid to anyone if the insured
person survives the policy tenure. Hence, any sum received under a term insurance policy
shall continue to be exempt under clause (IOD) of section 10 of the Act, irrespective of the
16
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Circular No. 15 of 2023
amount of the premium payable in respect of such policy. Further the premium paid for such
policies shall not be counted for checking Rs 5,00,000 limit for the purposes of sixth and
seventh proviso.
(Sourabh Jai ~/o'/,/ ~v3
Under Secretary to the Government ofindia
Copy to:
I. PS to FM/ OSD to FMI PS to MoS(F)/ OSD to MoS(F)
2. PPS to Secretary (Revenue)
3. Chairman, CBDT & All Members, CBDT
4. All Pr. DGsIT/ Pr. CCsIT
5. All Joint Secretaries! CsIT/ Directors/ Deputy Secretaries/ Under Secretaries of CBDT
6. The C&AG oflndia
7. The JS & Legal Adviser, Ministry of Law & Justice, New Delhi
8. Pr.CIT (M&TP), Official Spokesperson ofCBDT
9. % DGIT (Systems), New Delhi for uploading on official website.
10. JCIT (Database Cell), CBDT for uploading on www.irsofficersonline.gov.in
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