To make it easier to put this year’s provisions into action, recommendations have been prepared.
The Central Board of Direct Taxes (CBDT), which was introduced in this year’s union budget, released a set of comprehensive rules on the withdrawal of tax advantages on fat insurance plans on Wednesday.
The comprehensive 17-page rules published on the tax authority’s website provided circumstances and examples to clarify the amendments made to the Income Tax Act this year. The guidelines are published to remove obstacles to the application of this year’s regulations.
Any income derived from an insurance policy, including the bonus sum, is tax-exempt under the Income Tax Act. This clause was changed this year to exclude insurance plans with yearly premiums of more than 500,000 in any of the prior years. This was done to make sure that the wealthy would not monopolise the tax advantages intended for the people.
Amit Maheshwari, Tax Partner at AKM Global, a tax and consulting organisation, stated that the purpose of the provision was to eliminate the tax benefit granted to investments that were misrepresented as insurance plans.
“CBT has published instructions to reduce obstacles, which is a positive gesture as this rule would affect many people, notably the wealthy.
