Budget 2024-25: New TDS Rate On Life Insurance Payouts: How Will This Benefit You?

In Budget 2023, the government had stated that income received from insurance policies issued on or after 1 April 2023 (other than ULIPs), having a premium or aggregate of premium over Rs 5 lakh in a given financial year, will be subjected to tax (exception in the case of the death of the insured).Life insurance providers will implement this change starting October 1, 2024, after which policyholders will receive payouts with the adjusted TDS rate.However, policyholders must reach out to their insurance companies for more clarity on how the reduced TDS rate will impact their particular policies. A review of your insurance policy would also provide more clarity regarding the benefits you will get upon payouts.Though it’s marginal, the reduction in the TDS rate is a welcome move for policyholders, contributing to more benefits for them from their insurance policies.

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