Budget 2023: Insurance Policies Over 5 lakh premium will be taxable

While announcing the Budget 2023, Finance Minister Nirmala Sitharaman announced that proceeds from life insurance except for ULIPs, having an annual premium of Rs. 5 lakhs would now be taxable. Read on to know how the latest update can impact your life insurance purchase in the future, thus increasing your tax liability.

Every year the Finance Minister announces a budget which introduces several reforms in each sector, contributing towards the growth of the company. If you are considering buying life insurance to get tax exemption then it is imperative to understand the new rule.

The new rule states that proceeds from life insurance having an annual premium of above Rs. 5 lakh will attract tax liability. However, the rule will be applicable only for policies purchased before April 1, 2023.

Over the years, people have understood the importance of having life insurance as it offers complete financial security to an individual and their families, but the latest announcement can lead to decrease in interest shown by people in traditional high-value insurance coverage. However, it is likely that people would now be more interested in buying ULIP or term insurance which is a pure protection plan

The new rule is likely to impact high net worth individuals who invest in life insurance to cater to the growing financial requirements of their family.

Disclaimer

This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.