The government has recently introduced new income tax rules such as Aadhaar-Pam Interchangeability, KYC update and TDS on cash withdrawal as well as on purchasing an immovable property that has become effective from September 1.
From 1 September, In case of TDS on purchasing immovable property, a buyer will be required to deduct TDS at the rate of 1 percent of purchase price while buying an immovable property of more than Rs 50 lakhs.
Apart from the above rules, new rules on insurance proceeds have also announced, here are 3 things you should know about new income tax rules on insurance proceeds:
1. Section 194DA: The Finance Bill 2019 proposed an amendment to Section 194DA Section 194DA deals with the payment of insurance policy that is not exempted under Section 10(10D).
As per section 194DA, the deductor has to deduct TDS at the rate of 5% (Earlier, the TDS rate was 1%) if the life insurance maturity proceeds received are taxable in your hands. Such proceeds also include sum received by way of bonus.
2. Limit for deducting TDS: In case the insurance sum payment is less than ₹1 lakh or received on the death of the insured person, TDS shall not be deductible.
3. Exemption from Income Tax: As Section 10 (10D), insurance policy maturity proceeds are exempted from income tax if the sum assured in a life insurance policy is at least 10 times the annual premium.
However, in case the policies were issued before April 2012, the premium must be less than 20% of the sum assured to get the tax exemption benefit on maturity.