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Section 10(10D) of the Income Tax Act - Life Insurance

Neviya LaishramNov 5, 2025

Section 10(10D) of the Income Tax Act, 1961 is a provision under which tax exemption applies on the amount received from a life insurance policy, including maturity proceeds, survival benefits, or death benefits, subject to certain conditions.

Section 10(10D) of the Income Tax Act life insurance concept with umbrella and shield icons representing tax exemption and financial protection benefits.

Contents

Payouts that Qualify for Exemption Under Section 10(10D)
Conditions for Tax Exemption Under Section 10(10D)
Latest Amendments
- In the case of ULIP Policies (Unit Linked Insurance Plans)
- For Non-ULIP Life Policies
Difference Between Section 80C and Section 10(10D) of the Income Tax Act
Conclusion
Frequently Asked Questions

Payouts that Qualify for Exemption Under Section 10(10D)

Tax-exempt payouts of life insurance policies include the following:

Maturity Proceeds: Amount received on completion of the policy term.
Death Benefits: Sum assured paid to the nominee upon the policyholder’s death (always tax-free).
Bonuses or Additions: Any declared bonus or loyalty addition linked to the policy proceeds.

Conditions for Tax Exemption Under Section 10(10D)

To claim tax-free benefits, the conditions to be considered consist of the following:

Policy Issue Date	Premium Limit for Exemption
Policies between 1 April 2003 and 31 March 2012.	The amount of the premium on a yearly basis cannot be above 20% of the sum assured.
Policies issued on or after 1st April 2012.	The maximum premium that one can pay annually is 10% of the sum guaranteed.
Policies for persons with disabilities or specific diseases (Section 80U/80DDB) issued on or after 1 April 2013	Annual premium must not exceed 15% of the sum assured.

When the premium exceeds these limits, the maturity proceeds will be subject to tax.

Latest Amendments

In the case of ULIP Policies (Unit Linked Insurance Plans)

The maturity proceeds will not be tax-exempt if the total premium for one or more ULIPs exceeds ₹2.5 lakh in a financial year.
The death benefits of ULIPs, however, are completely tax-exempt.

For Non-ULIP Life Policies

From 1 April 2023, if the total premium for all non-ULIP life insurance policies exceeds ₹ 5 lakh in any year, maturity proceeds will not qualify for exemption.
Benefits of death do remain tax-free.

Let’s understand Section 10(10D) with a simple example

In 2016, Rahul bought a life insurance policy for 10 lakh rupees, with an annual premium of 80,000 rupees. Since ₹80,000 is 8% of ₹10 lakh (i.e., 10% below the threshold set for policies issued after April 1, 2012), the maturity amount will be tax-free as long as all the conditions are met.

Difference Between Section 80C and Section 10(10D) of the Income Tax Act

Understand how Section 80C and Section 10(10D) offer different tax benefits on life insurance. The two sections offer various tax benefits. Section 80C remits investment tax, and Section 10(10D) makes the policy payouts tax-free.

Aspect	Section 80C	Section 10(10D)
Type of Benefit	Deduction for the premium paid	Exemption for the amount received
Maximum Limit	₹1.5 lakh per year	No fixed limit
Applies To	Premium payments	Maturity, death, or surrender proceeds
When Claimed	During the investment year	During the payout year

Conclusion

Section 10(10D) of the Income Tax Act allows policyholders to receive tax-free benefits from their life insurance policies. It covers maturity proceeds, death benefits, and bonuses, provided the premium-to-sum assured ratio and other eligibility conditions are met.