Tax Deduction at Source


Tax Deduction at Source

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Income Tax
Tax deduction at source from non-exempt payments made under life insurance policy [Section 194DA]

Tax deduction at source from non-exempt payments made under life insurance policy [Section 194DA] [W.e.f. 1-10-2014]

 

Under the existing provisions of section 10(10D), any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt subject to fulfillment of conditions specified under the said section. Therefore, the sum received under a life insurance policy which does not fulfill the conditions specified under section 10(10D) are taxable under the provisions. In order to have a mechanism for reporting of transactions and collection of tax in respect of sum paid under life insurance policies which are not exempted under section 10(10D), the Act has inserted a section 194DA to provide for deduction of tax at the rate of 2% on sum paid under a life insurance policy, including the sum allocated by way of bonus, which are not exempt under section 10(10D). However, no deduction under this section shall be made if the aggregate sum paid in a financial year to an assessee is less than ` 1,00,000.back

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