The Finance Bill, 2025 has introduced a significant amendment to Section 10(10D) of the Income-tax Act, 1961, providing a major relief for life insurance policyholders of International Financial Services Centre (IFSC) insurance offices. The amendment ensures that proceeds received on life insurance policies issued by IFSC insurance offices will be exempted from taxation without the condition related to the maximum premium payable on such policies.
Key Changes in Section 10(10D)
The proposed amendment rectifies an earlier reference to IFSC insurance intermediary offices, replacing it with the correct term—IFSC insurance offices. This correction aligns the tax exemption framework with the actual entities issuing such insurance policies, ensuring a smoother regulatory implementation.
Prior to this amendment, the exemption on life insurance proceeds under Section 10(10D) was subject to conditions, including a cap on the premium amount. However, with the revised provision, life insurance policies issued by IFSC insurance offices will enjoy a broader tax exemption, making IFSC-based insurance offerings more attractive to policyholders.
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