• SENSEX
    NIFTY 50
VIDEOS
Finance

Money Money Money: TDS of 5% not applicable on term plan, says Sanjiv Bajaj of Bajaj Capital

Updated : July 16, 2019 05:54 PM IST

In the 2019 Union Budget presented by finance minister Nirmala Sitharaman on July 5, the tax deducted at source (TDS) on life insurance policies will now attract a 5 percent tax on any gains made. So the TDS will now be at 5 percent of net gain versus 1 percent of total maturity amount earlier.

Sanjiv Bajaj, vice-chairman and managing director of Bajaj Capital said: “There are two types of policies, one which are tax free which come under 10 (10D) where the sum assured is more than 10 times of the premium that you are paying. That policies will continue to remain tax free.

"However, there are policies which are taxable especially in case of single premium or where the life cover is not 10 times of the premium that you are paying, in those policies now 5 percent of the net gain is going to get taxed.”

He added: “Earlier what was happening was that there was a TDS deduction of 1 percent of the total amount. Now, they have clarified that rather than the total amount, it is going to be 5 percent of the net gain. Five percent is high, but the only positive in that is they have clarified that only the gain will be taxed and TDS is only being cut on the gain."

Bajaj further added that the TDS is not applicable on term plan. “Term plan is only pure protection. So it is not applicable on term plan. However, if it is any investment based policy whether it is unit linked or traditional plan, it is going to be applicable on all the plans which do not meet the 10 (10D) condition which is 10 times the life cover,” he said.
primo org
Have you signed up for Primo, our daily newsletter?
It has all the stories and data on the market, business, economy and tech that you need to know.
cnbc two logos
To keep watching CNBC-TV18, India's No. 1 English Business News Channel, call your Cable or DTH Operator and subscribe now for just Rs. 4 per month. You can also subscribe to CNBC-TV18 Prime HD for Re 1/- per month.Find out more
Live TV