New income tax rules that impact TDS: All you need to know

New income tax rules that impact TDS: All you need to know

From increased TDS outgo on purchasing immovable property and life insurance maturity proceeds, to two new areas where TDS will now be slapped on, here's a look at some changes that came into effect on Sunday

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BusinessToday.In
  • Sep 2, 2019,
  • Updated Sep 2, 2019 2:50 PM IST

Some of Finance Minister Nirmala Sitharaman's major income tax related announcements in Budget 2019 came into effect on Sunday. Among them, the changes that will have a direct bearing on the common man's wallet relate to tax deducted at source (TDS). Here's all you need to know about the new norms:

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If life insurance maturity proceeds received are taxable, then the TDS will now be deducted at the rate of 5 per cent on the net income portion. The net income portion is defined as the total sum received less of the total amount of insurance premium paid. Earlier, the TDS was 1 per cent of the gross maturity payout under the policy.

According to Cleartax, any money received from a life insurance policy, where the premium paid on the policy is more than 10 per cent of the sum assured for policies issued after April 1, 2012 - or 20 per cent for policies issued before this date - is fully taxable. Keep in mind that the exceptions to this rule under Section 10(10D) include policies taken after April 1, 2013, on the life of a person with a disability or a disease specified under Sections 80U and 80DDB, where the amount received on maturity is tax-free. The precondition is that the premium paid cannot exceed 15 per cent of the sum assured.

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Also read: From TDS in cash withdrawal to new traffic rules, here are 10 new rules that will start from September 1

Also read: From driving without seat belt to overloaded vehicles; know all new fines on various traffic offences

Some of Finance Minister Nirmala Sitharaman's major income tax related announcements in Budget 2019 came into effect on Sunday. Among them, the changes that will have a direct bearing on the common man's wallet relate to tax deducted at source (TDS). Here's all you need to know about the new norms:

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If life insurance maturity proceeds received are taxable, then the TDS will now be deducted at the rate of 5 per cent on the net income portion. The net income portion is defined as the total sum received less of the total amount of insurance premium paid. Earlier, the TDS was 1 per cent of the gross maturity payout under the policy.

According to Cleartax, any money received from a life insurance policy, where the premium paid on the policy is more than 10 per cent of the sum assured for policies issued after April 1, 2012 - or 20 per cent for policies issued before this date - is fully taxable. Keep in mind that the exceptions to this rule under Section 10(10D) include policies taken after April 1, 2013, on the life of a person with a disability or a disease specified under Sections 80U and 80DDB, where the amount received on maturity is tax-free. The precondition is that the premium paid cannot exceed 15 per cent of the sum assured.

Advertisement

Also read: From TDS in cash withdrawal to new traffic rules, here are 10 new rules that will start from September 1

Also read: From driving without seat belt to overloaded vehicles; know all new fines on various traffic offences

Read more!
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