Exemption on life insurance policy from IFSC Insurance offices
The Finance Bill, 2025, proposes several key changes in the Income Tax Act, 1961, to continue reforms in the direct tax system through tax reliefs, removing difficulties faced by taxpayers, and rationalizing1 various provisions. Here are some of the key changes:
Exemption on life insurance policy from IFSC Insurance offices
Clause (10D) of section 10 provides exemption to sum received under a life insurance policy
including the sum allocated by way of bonus on such policy, subject to the conditions specified therein.
The said provisions are also applicable to insurance policies issued by IFSC Insurance Offices.
2. Provisos (fourth, fifth, sixth and seventh provisos) to the said clause, inter alia, provide that the
exemption under the said clause is not available if annual amount of premium or aggregate of premiums
payable is above Rs. 2.5 lakhs for unit linked insurance policies, and Rs. 5 lakhs for life insurance
policies other than unit linked insurance policies.
3. In order to provide parity to non-residents availing life insurance from insurance office in IFSC
vis a vis other foreign jurisdiction, it is proposed to amend the clause (10D) of section 10 so as to
provide that proceeds received on life insurance policy issued by IFSC insurance intermediary office
shall be exempted without the condition related to the maximum premium payable on such policy as
mentioned above.
4. These amendments will take effect from the 1st day of April, 2025.
[Clause 6]