New Delhi: Within the Union Price range 2023-24, Finance Minister Nirmala Sitharaman introduced removing of tax exemption on insurance coverage insurance policies with mixture premium above Rs 5 lakh. The transfer is geared toward decreasing or slicing revenue tax exemption on proceeds of insurance coverage insurance policies with premium worth.
Nevertheless, this has given insurance coverage corporations & brokers an opportunity to make their gross sales pitch to clients, on bypass the brand new Price range provision and might nonetheless avail advantages of a coverage with tax exemption.
A number one day by day experiences that some brokers are making last-minute pitch to buyers for buying insurance policies with excessive premium, in order that they might make the most of tax-free maturity from these investments.
Notably, the sale in insurance coverage insurance policies normally registers an uptick across the closing of monetary 12 months as many working professionals put money into Fastened deposits/insurances insurance policies to avail advantages of tax exemption, of their revenue tax returns.
Why shopping for high-premium coverage will probably be a mistake
No matter bulletins that Finance Minister made in Price range 2023-24, that will probably be relevant from April 1, 2023.
Therefore, in case you fall into entice of insurance coverage brokers and their large guarantees, you’ll be making an enormous mistake.
In her Price range speech, FM Sitharaman clearly mentioned that maturity from conventional insurance coverage insurance policies, issued on or after April 1, 2023, with premium above Rs 5 lakh, won’t be exempted from tax.
It’s necessary to notice that the brand new rule won’t have an effect on & have any bearing on the insurance policies issued earlier than March 31, this 12 months.