What new TDS rates on life insurance payouts mean for you

By Nandini Das CNBC-TV18.com Published July 24, 2024

[{"selector":"#anim-3ac7a7d3-88fc-43fe-9079-9b143dac600c [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(12.25328925421174%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] Tax Deducted at Source (TDS) on life insurance payouts would be decreased from rate of 5% to 2%. Let’s look at the key changes:

New TDS Rate on Life Insurance

[{"selector":"#anim-c3aaa5f4-f8d6-436a-af16-1b4260e5c557 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(10.440921014624625%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] Starting October 1, 2024, the TDS on life insurance payouts will be reduced.

Current Vs New Rate

The current TDS rate is 5%. It will be reduced to 2%.

Impact on Policyholders

[{"selector":"#anim-0a4bd86e-95a4-4299-9a1e-0b946b279597 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(7.8322413591732065%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Policyholders will receive a larger payout from their policies.

Reason for Change

[{"selector":"#anim-efa8fcd8-275f-485c-8539-30f9fb98673e [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(25.029296420080684%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] This change is part of the Budget 2024 proposals.

More Money for Policyholders

[{"selector":"#anim-582da245-0224-425a-a777-b027c9e002bb [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(51.7014696691135%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] The reduction in TDS means more money when policies mature or claims are settled.

Who Benefits the Most?

[{"selector":"#anim-47523e1c-7be4-43da-a71f-9b9e6fb5bf09 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(0%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Policyholders with large policies will see more significant payouts.

Bonuses and Payouts

[{"selector":"#anim-c67fbe54-3d04-474d-bcc1-89c4dbf35b73 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-50.51892515672309%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] Policyholders receiving bonuses will benefit from higher net amounts.

Retirees and Seniors

Retirees and seniors will receive more substantial payouts.

Implementation Date

[{"selector":"#anim-e82fe5db-038d-4d07-9fde-9c64f613df47 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-51.35690793621048%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] Life insurance companies will implement the change on October 1, 2024.

[{"selector":"#anim-e75acced-1ba0-433d-b99e-4af77a11cb4d","keyframes":{"transform":["scale(1)","scale(1.5)","scale(0.95)","scale(1)"],"offset":[0,0.33,0.66,1]},"delay":0,"duration":1450,"easing":"ease-in-out","fill":"both","iterations":1}] Thanks For Reading! Budget 2024: New tax regime updates with revised slabs, higher deduction Read More