Navigating Taxation: Understanding TDS on Life Insurance Policies 💼💡

Life is unpredictable, but having life insurance can be your safety net, ensuring peace of mind for you and your loved ones. However, it's important to know that when your life insurance policy matures, you might face something called Tax Deducted at Source (TDS). Let's make this simple to understand.

What is TDS? 🤔

TDS stands for Tax Deducted at Source. It's a way the government collects tax directly from the source of your income, including life insurance policies, before it reaches you. This means a part of your policy's maturity amount could be withheld as tax.

Understanding TDS on ULIPs 🌐

• Before February 1, 2021: ULIPs issued before this date are exempt from tax on maturity benefits.
• After February 1, 2021, with Annual Premium Under ₹2.5 lakh: Tax-free maturity benefits, subject to conditions.
• After February 1, 2021, with Annual Premium Over ₹2.5 lakh: Maturity benefits become taxable.
• Death Benefit: Tax-free, provided certain conditions are met.

Tips to Manage TDS on Life Insurance Policies 📝

Go Long-Term: Keeping your policy for a longer period not only ensures financial security but also impacts the TDS deduction.

Provide PAN Details: Lower your TDS rate by giving your insurance provider your PAN details.

Understand TDS Calculation: Include the maturity amount in your total income for the year for accurate tax calculation.

Know the Deduction Rules: Being aware of the deduction brackets and exceptions helps you prepare for any deductions.

Remember, the maturity amount you receive will be after the TDS deduction, so planning and understanding these rules are crucial.

At Bandhan Life, we're here to help you navigate these waters with policies designed for your peace of mind, like our Term Plan, catering to a range of needs including terminal illness coverage.

Stay informed, and ensure your financial planning is solid with Bandhan Life!