Budget 2025 Proposes Exemption on life insurance policy from IFSC Insurance offices
This amendment is to provide that proceeds received on life insurance policy issued by IFSC insurance intermediary office shall be exempted without the condition related to the maximum premium payable
Union Budget 2025 – Budget 2025 Proposes Exemption – life insurance policy – Taxscan
Union Budget 2025 – Budget 2025 Proposes Exemption – life insurance policy – Taxscan
Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on February 1st, 2025 at 11:00 AM before the Parliament. In order to provide parity to non-residents availing life insurance from the insurance office in IFSC vis a vis other foreign jurisdiction, it is proposed to amend the clause (10D) of section 10 .
This amendment is to provide that proceeds received on life insurance policy issued by IFSC insurance intermediary office shall be exempted without the condition related to the maximum premium payable on such policy as mentioned above.
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Subject to the restrictions outlined therein, the amount obtained under a life insurance policy, including the amount awarded as a bonus, is excluded from the requirements of clause (10D) of section 10. The aforementioned clauses also apply to insurance plans that are provided by IFSC Insurance Offices.
The aforementioned clause's provisos (fourth, fifth, sixth, and seventh provisos) stipulate, among other things, that the exemption is not available if the annual premium or total amount of premiums payable exceeds Rs. 2.5 lakhs for unit-linked insurance policies and Rs. 5 lakhs for life insurance policies that are not unit-linked insurance policies.
This will increase the growth of IFSC. It will entice both domestic and international investors to purchase insurance products based on the IFSC. Long-term savings will be encouraged by this. IFSC life insurance plans are more appealing to investors because they are exempt. The government's plan to establish GIFT City as a top financial services destination will be aided by this project.
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This exemption is a component of larger banking sector reforms meant to facilitate commercial dealings and draw in foreign investment. These changes will go into effect on April 1st, 2025.
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