Section 10(10D) Income Tax Act: Exemption & Benefits

Section 10(10D) Income Tax Act: Exemption & Benefits

When you invest in a life insurance policy, the benefits go beyond just financial protection; they can also offer significant tax advantages. One of the most important provisions governing this benefit is Section 10(10D) of the Income Tax Act, 1961, which deals with the tax treatment of life insurance payouts.

In simple terms, Section 10(10D) provides tax exemption on amounts received under a life insurance policy, whether as maturity proceeds, survival benefits, or death benefits, subject to certain conditions. This makes life insurance one of the few financial instruments in India where the returns can be completely tax-free if structured correctly.

However, not all payouts automatically qualify for exemption. Over the years, the government has introduced specific rules on premium limits, policy issuance dates, and policy types to prevent the misuse of tax benefits, especially for high-value insurance policies. If these conditions are not met, the proceeds may become partially or fully taxable.

Understanding how Section 10(10D) works is crucial before buying a policy or planning long-term finances. In this blog, we break down what Section 10(10D) covers, the eligibility conditions, key exceptions, and how you can ensure your life insurance payouts remain tax-free.

What is Section 10(10D) of the Income Tax Act?

Section 10(10D) of the Income Tax Act, 1961, outlines the tax treatment of amounts received from life insurance policies in India. It specifies when life insurance proceeds are exempt from income tax and the conditions under which this exemption applies. The section primarily aims to encourage individuals to use life insurance as a long-term financial protection and savings tool, while also preventing the misuse of tax benefits through high-value investment-oriented policies.

Under this provision, the amount received from a life insurance policy is generally exempt from tax, provided certain eligibility criteria related to premium limits, policy issuance date, and policy type are met. The exemption applies to various kinds of payouts during the policy term or at maturity.

Section 10(10D) covers tax exemption on:

• Maturity proceeds received at the end of the policy term
• Survival benefits are paid at regular intervals during the policy term
• Death benefits are paid to the nominee or legal heir in case of the policyholder's demise
• Bonus amounts received along with maturity or death benefits
• Amounts received under both traditional life insurance and eligible unit-linked insurance plans (ULIPs)

Key points to note:

• The tax exemption is subject to conditions related to the premium-to-sum-assured ratio, which varies based on the policy issue date
• Certain high-premium policies may not qualify for exemption if they exceed prescribed limits
• Death benefits remain fully exempt from tax, irrespective of the premium amount or policy value
• The exemption applies only if the policy complies with the conditions specified under the Income Tax Act

In essence, Section 10(10D) ensures that life insurance payouts remain tax-efficient, provided the policy is structured and maintained in line with the applicable tax rules. Understanding this provision helps policyholders make informed decisions while purchasing or reviewing their life insurance cover.

Who Can Claim Tax-Free Benefits Under Section 10(10D)?

Tax-free benefits under Section 10(10D) of the Income Tax Act are available to different stakeholders associated with a life insurance policy, provided the policy meets the prescribed conditions. The exemption applies based on who receives the payout and the nature of the benefit received.

The following individuals can claim tax-free benefits under Section 10(10D):

Policyholders

• Can claim tax exemption on maturity proceeds or survival benefits received during the policy term
• Applicable if the policy complies with premium limits and other eligibility conditions

Nominees

• Eligible for full tax exemption on death benefits received after the policyholder's demise
• The exemption applies irrespective of the premium amount or sum assured

Legal heirs

• Can claim tax-free death benefits if no nominee is registered or in case of legal succession
• Treated at par with nominees for tax purposes

Individuals holding multiple life insurance policies

• Can claim exemption separately for each eligible policy
• Subject to aggregate premium limits introduced for policies issued in specific financial years

ULIP policyholders (eligible cases)

• Can claim tax-free maturity proceeds if the annual premium does not exceed the prescribed threshold
• Policies exceeding the limit may lose tax exemption on maturity, but death benefits remain exempt

Important points to remember:

• The exemption applies only when payouts are received from life insurance policies covered under the Income Tax Act
• Any payout that does not meet the conditions of Section 10(10D) may be taxable under "Income from Other Sources"
• Policyholders should review policy terms and issuance dates to confirm eligibility

Understanding who can claim tax-free benefits helps ensure correct tax planning and avoid unexpected tax liabilities at the time of payout.

Life Insurance Policies Covered Under Section 10(10D)

Section 10(10D) of the Income Tax Act covers a wide range of life insurance policies, provided they meet the prescribed conditions related to premium limits, policy issue date, and policy structure. While the section broadly aims to keep life insurance payouts tax-free, eligibility depends on the type of policy and its design.

Before purchasing or reviewing a policy, it is important to understand whether it qualifies for tax exemption under this section.

Types of life insurance policies covered under Section 10(10D):

Key points to note:

• Death benefits received from any life insurance policy are fully exempt from tax, regardless of the premium amount
• Maturity proceeds and survival benefits are tax-free only if the policy complies with Section 10(10D) conditions
• High-premium policies issued after specified financial years may lose tax exemption on maturity proceeds
• Riders attached to life insurance policies are eligible only if they form part of the base policy and comply with premium limits

Understanding which life insurance policies are covered under Section 10(10D) helps policyholders choose tax-efficient products and avoid surprises at the time of payout.

Conditions for Tax Exemption Under Section 10(10D)

While Section 10(10D) of the Income Tax Act allows life insurance proceeds to be tax-free, this exemption is not automatic. The policy must meet certain conditions related to premium limits, policy issue date, and the nature of the payout. These rules have evolved to ensure that life insurance remains a protection-oriented product rather than a tax-saving investment tool.

Understanding these conditions is essential to avoid unexpected tax liability at maturity or payout.

Key conditions for tax exemption under Section 10(10D):

Premium-to-sum assured ratio

• The annual premium paid should not exceed a specified percentage of the sum assured
• The applicable percentage depends on the date on which the policy was issued
• If the premium exceeds the prescribed limit, maturity proceeds and survival benefits may become taxable

Policy issue date matters

• Different rules govern policies issued before and after specific cut-off dates
• Older policies generally enjoy more relaxed premium conditions
• Newer policies, especially high-value ones, are subject to stricter limits

Treatment of death benefits

• Death benefits are fully exempt from tax under all circumstances
• There is no upper limit on the premium or sum assured for claiming exemption on death benefits
• The exemption applies whether the payout is received by a nominee or a legal heir

ULIP-specific conditions

• Unit Linked Insurance Plans are eligible for tax exemption only if the annual premium does not exceed the prescribed threshold
• If the premium exceeds the limit, maturity proceeds may become taxable
• Death benefits under ULIPs remain fully tax-free, even if the premium exceeds the threshold

Multiple policies and aggregate premium limits

• If an individual holds multiple life insurance policies issued in the same financial year, aggregate premium limits may apply
• Exceeding the combined premium threshold can result in loss of tax exemption on maturity proceeds for some or all policies

Exclusion of certain payouts

• Any amount received by way of surrender of a policy that does not meet exemption conditions may be taxable
• Keyman Insurance Policy payouts are not eligible for exemption under Section 10(10D)
• Employer-owned policies typically do not qualify for tax-free treatment

Quick infographic summary (visual-ready):

• Policy compliant with premium limits → Tax-free maturity proceeds
• Premium exceeds prescribed limit → Maturity proceeds taxable
• Death benefit → Always tax-free
• ULIPs above premium threshold → Maturity taxable, death benefit exempt
• Keyman insurance → Not exempt

Why these conditions matter

Failing to meet even one of the applicable conditions can change the tax treatment of the entire payout. What appears to be a tax-efficient policy at the time of purchase may lead to taxable income later if premium limits are breached or policy terms are altered.

By understanding and tracking these conditions, policyholders can ensure their life insurance benefits remain aligned with both protection goals and tax efficiency.

Life Insurance Premium % Rule (Before and After 1 April 2012)

The premium percentage rule under Section 10(10D) decides whether life insurance maturity proceeds and survival benefits are tax-free. It compares the annual premium paid with the sum assured and varies based on the policy issue date.

Policies issued before 1 April 2012

• Annual premium should not exceed 20% of the sum assured
• If the premium stays within this limit, maturity proceeds, and bonuses are tax-free
• If the premium exceeds 20% in any policy year, the Section 10(10D) exemption does not apply
• Death benefits remain fully tax-free, irrespective of the premium amount

Policies issued on or after 1 April 2012

• Annual premium must not exceed 10% of the sum assured
• This limit applies to each policy year, not just at inception
• Exceeding the 10% limit makes maturity proceeds and survival benefits taxable
• Death benefits continue to remain fully exempt from tax

Special cases

• For policies issued on or after 1 April 2013 to individuals with specified disabilities or diseases
• Premium limit is relaxed to 15% of the sum assured, as per applicable provisions

Key takeaways

• The premium percentage rule applies year-wise
• Even one year of excess premium can affect the tax exemption on maturity
• The rule does not impact the tax treatment of death benefits

ULIPs Premium Limit – Rule & Thresholds

Unit Linked Insurance Plans (ULIPs) enjoy tax exemption under Section 10(10D), but only when specific premium-related conditions are met. To curb the use of ULIPs as high-value investment products, the government introduced premium thresholds that directly impact the taxability of maturity proceeds.

These limits apply based on the policy issue date and the total premium paid across multiple ULIPs.

Key ULIP premium rules under Section 10(10D):

• The tax exemption on ULIP maturity proceeds depends on the annual premium amount
• Premium thresholds apply collectively across all ULIPs held by an individual
• If the premium exceeds the prescribed limit, maturity proceeds become taxable
• Death benefits received under ULIPs remain fully tax-free, irrespective of the premium amount
• The rules apply only to ULIPs issued on or after the specified cut-off date

Impact of holding multiple ULIPs

• If an individual holds more than one ULIP issued on or after 1 February 2021
• The combined annual premium of all such ULIPs is considered
• If the total premium exceeds ₹2.5 lakh in a financial year, tax exemption on maturity is lost
• Each ULIP is not evaluated independently for exemption purposes

Additional points to note

• The premium limit applies only to maturity proceeds and survival benefits
• ULIPs breaching the threshold may be taxed as capital gains
• Switching between funds within a ULIP does not trigger taxation
• ULIPs issued before 1 February 2021 continue to enjoy tax exemption, subject to older rules

Understanding ULIP premium thresholds is essential before investing, especially for high-income individuals planning long-term wealth creation through insurance-linked products.

Death Benefit – Always Tax-Free

Under Section 10(10D) of the Income Tax Act, any amount received as a death benefit from a life insurance policy is fully exempt from income tax. This exemption applies regardless of the premium paid, sum assured, or the policy issue date. The objective is to ensure that financial support received by dependants after the policyholder's death is not reduced due to tax.

Key points to note:

• Death benefits paid to nominees or legal heirs are completely tax-free
• No premium limit or threshold applies to the death benefit exemption
• The exemption applies across all life insurance policies, including term plans, traditional plans, and ULIPs
• Premium percentage rules and ULIP thresholds do not affect death benefit taxation
• Bonuses or additional amounts paid along with the death benefit are also exempt
• The exemption applies whether the payout is received as a lump sum or in instalments

In summary, even if a policy does not qualify for tax exemption on maturity, the death benefit remains fully exempt under Section 10(10D), making life insurance a dependable financial safeguard for families.

When Can Section 10(10D) Exemption Be Lost? (Taxable Scenarios)

Although Section 10(10D) provides generous tax relief on life insurance payouts, the exemption can be withdrawn in certain situations. These taxable scenarios usually arise when a policy does not meet the prescribed premium conditions, falls under excluded policy categories, or breaches limits introduced to curb misuse of tax benefits. Understanding when and why the exemption is lost helps policyholders avoid unexpected tax outgo at maturity.

Common scenarios where Section 10(10D) exemption is not available

How is tax exemption is lost

• Policy payout received
• → Check the nature of the payout
• → If death benefit → Always tax-free
• → If maturity or survival benefit → Move to premium checks
• Check policy issue date
• → Apply applicable premium percentage rule
• → If premium exceeds allowed limit → Exemption lost
• For ULIPs or high-premium policies
• → Check aggregate premium thresholds
• → If threshold breached → Maturity proceeds taxable
• Check policy category
• → If Keyman or employer-owned → Exemption not available

Important clarifications

• Losing the exemption does not affect death benefit taxability; death benefits remain fully exempt
• Taxability usually applies to maturity proceeds and bonuses, not the entire policy value blindly
• Taxable proceeds are generally taxed under "Income from Other Sources" or as capital gains, depending on the policy type
• Policies issued before new rules came into effect may continue under older provisions

Why these matters?

Many policyholders assume that all life insurance payouts are tax-free, but that is not always true. Exemptions under Section 10(10D) are conditional and can be withdrawn if limits are breached even in a single policy year. Reviewing premium amounts, issue dates, and policy structure is essential to ensure that maturity proceeds remain tax efficient.

New ULIP Taxation & Capital Gains (Post-2021 / 2025)

In recent years, the tax treatment of Unit Linked Insurance Plans (ULIPs) has undergone significant changes. These changes were introduced to prevent ULIPs from being used primarily as high-value investment instruments while still preserving their role as insurance-cum-investment products.

Earlier, ULIPs enjoyed broad tax exemptions under Section 10(10D). However, from 2021 onwards, new premium thresholds were introduced, and from 2025, clarity was provided on how taxable ULIPs would be treated under capital gains provisions.

ULIP taxation changes introduced post-2021

For ULIPs issued on or after 1 February 2021, tax exemption under Section 10(10D) is available only if the annual premium does not exceed ₹2.5 lakh. This limit applies on an aggregate basis across all ULIPs held by an individual in a financial year.

If the premium exceeds this threshold, maturity proceeds are no longer exempt under Section 10(10D). However, death benefits continue to remain fully tax-free.

Capital gains taxation applicable from 2025

ULIPs that lose Section 10(10D) exemption due to higher premiums are treated as capital assets. The gains arising on maturity are taxed as capital gains, bringing ULIPs closer to mutual fund–like taxation for high-premium policies.

The holding period and tax rates depend on whether the ULIP is equity-oriented or debt-oriented, based on the fund allocation.

Key points to keep in mind

• The ₹2.5 lakh premium limit applies collectively across all ULIPs issued on or after 1 February 2021
• Only maturity proceeds are impacted by the new taxation rules
• Capital gains taxation applies only when the Section 10(10D) exemption is lost
• Switching between funds within a ULIP does not attract tax
• ULIPs issued before 1 February 2021 continue to enjoy tax exemption, subject to older conditions

Why this change matters

These changes aim to create parity between ULIPs and other market-linked investment products, while ensuring that genuine insurance-linked savings remain tax-efficient. For policyholders investing in high-premium ULIPs, understanding capital gains implications is essential to avoid surprises at maturity and to plan long-term finances more effectively.

TDS on Life Insurance Payouts – Section 194DA Explained

While many life insurance payouts are exempt from tax under Section 10(10D), certain payouts may attract Tax Deducted at Source (TDS) under Section 194DA of the Income Tax Act. This provision applies only when the maturity proceeds of a life insurance policy are taxable.

Section 194DA specifies when insurers must deduct tax before paying out to the policyholder.

When does TDS under Section 194DA apply?

• TDS applies only to taxable life insurance payouts
• It is applicable when maturity or survival benefits are not exempt under Section 10(10D)
• Death benefits are excluded and do not attract TDS
• TDS is deducted only if the total payout in a financial year exceeds ₹1 lakh

TDS rate under Section 194DA

• TDS is deducted at 5% on the income component of the payout
• The income component is calculated as:
• Maturity proceeds minus total premiums paid
• If the policyholder does not furnish PAN, TDS may be deducted at a higher rate as per applicable provisions

Important points to remember

• TDS is deducted only on maturity or survival benefits
• It does not apply to death benefits under any circumstances
• TDS is an advance tax deduction and not the final tax liability
• The policyholder must report the taxable amount while filing the income tax return
• Any excess TDS deducted can be claimed as a refund

Simple example

A policyholder receives maturity proceeds of ₹6 lakh from a life insurance policy that does not qualify for exemption under Section 10(10D). The total premium paid over the policy term is ₹4.5 lakh.

• Income portion = ₹6 lakh – ₹4.5 lakh = ₹1.5 lakh
• TDS at 5% on ₹1.5 lakh = ₹7,500

The insurer deducts ₹7,500 as TDS and pays the balance amount to the policyholder. The final tax payable depends on the individual's income tax slab.

How to Report Section 10(10D) Exempt Income in ITR (Schedule EI)

Even though life insurance payouts exempt under Section 10(10D) are not taxable, they must still be disclosed while filing the Income Tax Return (ITR). Reporting this income correctly ensures transparency and helps avoid future scrutiny or notices from the tax department.

Exempt life insurance income is reported under Schedule EI (Exempt Income) in the ITR form.

Step-by-step process to report Section 10(10D) income in ITR

Step 1: Identify the exempt payout amount

• Confirm that the life insurance payout qualifies for exemption under Section 10(10D)
• This usually includes eligible maturity proceeds, survival benefits, or death benefits
• Ensure the policy meets premium limits and other conditions applicable to its issue date

Step 2: Choose the correct ITR form

• Most individual taxpayers use ITR-1, ITR-2, or ITR-3
• Schedule EI is available in all applicable ITR forms where exempt income needs to be reported

Step 3: Navigate to Schedule EI

• Log in to the income tax e-filing portal
• Open the relevant ITR form
• Go to the section titled "Schedule EI – Details of Exempt Income"

Step 4: Enter details under Section 10(10D)

• Locate the row for "Any other exempt income" or "Life insurance income exempt under Section 10(10D)"
• Enter the total exempt amount received during the financial year
• If multiple exempt insurance payouts were received, enter the aggregate amount

Step 5: Do not include exempt income elsewhere

• Do not report Section 10(10D) exempt income under "Income from Other Sources"
• It should not be added to gross total income or taxable income calculations

Step 6: Verify pre-filled data carefully

• Some insurers may report payout details to the tax department
• Cross-check pre-filled information with policy documents and payout statements

Step 7: Maintain supporting documents

• Keep policy documents, payout statements, and insurer communication safely
• These may be required if the tax department seeks clarification later

Important points to remember

• Reporting exempt income is mandatory even though no tax is payable
• Incorrect or non-reporting can trigger notices or reconciliation issues
• Only exempt payouts should be reported in Schedule EI; taxable payouts must be reported separately

Properly reporting Section 10(10D) income ensures accurate tax filing and reduces the risk of future compliance issues.

Comparing Section 10(10D) vs Other Tax Provisions (80C, 80DDB, 80U)

Various sections of the Income Tax Act offer tax benefits for insurance, health, disability, and long-term financial planning. However, they operate at different stages; some provide deductions while investing or paying premiums, while others provide exemptions at the time of payout.

Understanding these differences helps in better tax planning and avoiding overlap or confusion.

The table below compares Section 10(10D) with commonly used deduction sections such as 80C, 80DDB, and 80U.

How these sections differ in practical terms

• Section 10(10D) applies to the amount received from a life insurance policy, not the premium paid
• Sections 80C, 80DDB, and 80U provide deductions that reduce taxable income in the year of payment or eligibility
• Benefits under Section 10(10D) are independent of deductions claimed under Section 80C
• A policyholder can claim deduction on premiums under Section 80C and still receive tax-free maturity proceeds under Section 10(10D), if conditions are met
• Sections 80DDB and 80U are health- and disability-specific and do not relate to insurance payouts

Why this comparison matters

Taxpayers often assume all insurance-related tax benefits fall under one section. In reality, these provisions serve different purposes. While Sections 80C, 80DDB, and 80U help reduce tax liability during the earning phase, Section 10(10D) protects the final payout from taxation. Using them correctly and in combination can improve overall tax efficiency without breaching compliance rules.

Examples & Case Studies

The following real-world scenarios illustrate how Section 10(10D) applies in practice and when life insurance payouts remain tax-free or become taxable. These examples are indicative and assume no other changes in law or personal tax circumstances.

Case Study 1: Traditional Endowment Policy (Tax-Free Maturity)

Outcome:

The annual premium is below 10% of the sum assured. The policy complies with Section 10(10D) conditions, so the entire maturity proceeds, including bonuses, are tax-free.

Case Study 2: High-Premium Policy Issued After 1 April 2012 (Taxable Maturity)

Outcome:

Since the premium exceeds 10% of the sum assured, the policy does not qualify for Section 10(10D) exemption. Maturity proceeds are taxable. Death benefit, if any, would still be tax-free.

Case Study 3: ULIP Within Premium Threshold (Tax-Free)

Outcome:

The aggregate annual premium is below ₹2.5 lakh. The ULIP qualifies for Section 10(10D) exemption, and maturity proceeds are tax-free.

Case Study 4: Multiple ULIPs Exceeding Threshold (Taxable)

Outcome:

The aggregate annual premium exceeds ₹2.5 lakh. Section 10(10D) exemption is lost. Maturity proceeds are taxable as capital gains. Death benefits remain tax-free.

Case Study 5: Death Benefit Despite Non-Compliant Premium

Outcome:

Even though the policy does not meet the premium conditions for maturity exemption, the death benefit received by the nominee is fully tax-free under Section 10(10D).

Case Study 6: Surrender of Non-Compliant Policy

Outcome:

Since the policy does not qualify for Section 10(10D), the surrender proceeds are taxable. The income portion may also be subject to TDS under Section 194DA, if applicable.

Key takeaways from these examples

• Premium limits and policy issue dates play a decisive role in tax treatment
• ULIP taxation depends on aggregate premium, not individual policies
• Death benefits remain tax-free in all scenarios
• Non-compliant policies can lead to taxable maturity or surrender proceeds
• Reviewing policy structure early helps avoid tax surprises later

These examples highlight why understanding Section 10(10D) conditions is essential for effective insurance and tax planning.

Myths vs Facts on Tax-Free Life Insurance & ULIPs

There are several misconceptions around the tax treatment of life insurance policies and ULIPs, especially after recent rule changes. The section below clears common myths and presents the facts as per current tax provisions.

Myth 1: All life insurance payouts are always tax-free

Fact:

Life insurance payouts are tax-free only if they qualify under Section 10(10D). Maturity and survival benefits can become taxable if premium limits or other conditions are not met. Only death benefits are always tax-free.

Myth 2: If a policy qualifies under Section 80C, maturity proceeds are tax-free

Fact:

Section 80C and Section 10(10D) operate independently. A premium may qualify for deduction under Section 80C, but maturity proceeds can still be taxable if Section 10(10D) conditions are violated.

Myth 3: ULIPs are no longer tax-free

Fact:

ULIPs are still tax-free if the annual premium does not exceed ₹2.5 lakh for policies issued on or after 1 February 2021. Only high-premium ULIPs lose tax exemption on maturity.

Myth 4: Each ULIP is evaluated separately for tax exemption

Fact:

For ULIPs issued after 1 February 2021, the premium limit applies on an aggregate basis across all ULIPs held by an individual. Even if each policy is below the threshold individually, an exemption can be lost if the combined premium exceeds the limit.

Myth 5: Losing Section 10(10D) exemption means the entire payout is taxed

Fact:

Only the income portion of the payout is taxable. The total premiums paid are deducted before calculating taxable income or capital gains, depending on the policy type.

Myth 6: Death benefits can also become taxable for high-premium policies

Fact:

Death benefits are fully exempt under all circumstances, regardless of premium amount, policy value, or compliance with other conditions.

Myth 7: TDS means the full payout is taxed

Fact:

TDS under Section 194DA is deducted only on the income component of taxable payouts and is not the final tax liability. The actual tax payable depends on the individual's income slab and is adjusted at the time of filing the return.

Myth 8: Older policies are affected by the new ULIP and premium rules

Fact:

Policies issued before the specified cut-off dates generally continue under the rules applicable at the time of issuance. New restrictions apply only to policies issued after the notified dates.

Key takeaway

Life insurance and ULIP taxation are conditional, not automatic. Understanding premium limits, issue dates, and payout types is essential to avoid incorrect assumptions about tax-free treatment. Separating myths from facts helps policyholders plan better and prevents surprises at maturity or surrender.

Conclusion – Key Takeaways on Section 10(10D)

Section 10(10D) of the Income Tax Act plays a crucial role in determining the tax treatment of life insurance payouts in India. While it offers valuable tax exemption benefits, the exemption is conditional and depends on factors such as the policy issue date, premium amount, sum assured, and policy type.

One of the most important takeaways is that death benefits remain fully tax-free in all cases, regardless of premium limits or policy structure. However, maturity proceeds and survival benefits are exempt only when the policy complies with prescribed rules, including premium percentage limits and ULIP thresholds introduced in recent years.

The taxation of ULIPs has evolved significantly, especially for high-premium policies issued after 2021. While eligible ULIPs continue to enjoy tax-free maturity, non-compliant ULIPs are now taxed under capital gains provisions. This makes it essential for policyholders to assess aggregate premiums and understand how multiple policies are evaluated.

Another key aspect is compliance. Even exempt income under Section 10(10D) must be correctly reported in the income tax return to avoid future queries. Tax Deducted at Source under Section 194DA can also apply to taxable payouts, impacting the final amount received at maturity.

In summary, Section 10(10D) rewards disciplined, protection-focused insurance planning rather than high-value tax-driven investments. Reviewing policy details regularly, staying informed about rule changes, and aligning insurance choices with both financial goals and tax regulations can help ensure that life insurance benefits remain predictable, compliant, and tax-efficient over the long term.

AN Jan 62/26