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

Sanjiv Bajaj, vice-chairman and managing director of Bajaj Capital weighs in on the changes in taxation on life insurance policies in the 2019 Union Budget.

By Surabhi Upadhyay  Jul 16, 2019 5:54:55 PM IST (Updated)

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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.”