Enjoy tax benefits on your life insurance policy in India

As an NRI life insurance customer, you are eligible for tax benefits on the premiums paid and money received from your life insurance policies.

Get tax benefits on the premiums paid:

  • You can avail tax benefits under Section 80C on your Indian income up to `1.5 lakh paid towards Life Insurance.
  • You can also save tax by investing in a life insurance policy in the name of members under Hindu Undivided Family (HUF) as per Section 80C of the Income Tax Act, 1961.

Other tax benefits*:

  • You can also avail tax benefits on the earnings and maturity benefits of your life insurance policy under Section 10(10D).
  • As any other Indian citizen, you also enjoy basic Income tax exemption on your Indian income. Below are the exemption limits based on your age:
    • `2,50,000 (if you are an individual below 60 years of age)
    • `3,00,000 (if you are a senior citizen aged 60 years but less than 80 years)
    • `5,00,000 (if you are a super senior citizen of 80 years or above)
  • You can move your money from equity to debt funds, or vice versa at no additional charges

*Tax benefits are subject to conditions of Section 80C, 10(10D) & other provisions of the Income Tax Act, 1961, and are subject to amendments made thereto from time to time.

Tax Center – FATCA/ CRS

 

Central Board of Direct Taxes (CBDT) has notified rules on due diligence, maintenance of information and reporting of the accounts regarding non-resident Indians who are covered under the Foreign Account Tax Compliance Act (FATCA-US person) or Common Reporting Standard (CRS)( Non-US person) on August 7, 2015.

Who is impacted by FATCA/CRS?

It is applicable to all the policyholders, where any of the following indicia is true:

Citizenship or tax residency outside India

Place of birth outside India

Mailing or residence address (including P.O.Box) outside India

Telephone number (residence or mobile) outside India

Standing instruction of transfer funds to an account domiciled outside India

Power of attorney or signatory authority granted to a person with address outside India

A "hold mail" instruction or "in-care-of" address in a jurisdiction outside India if the reporting financial institution does not have any other address on file for the account holder

What are the details required for submitting FATCA/CRS?

Following additional details will be mandatorily required at the time of account opening and at the time of renewals for pre-existing accounts as defined under FATCA/CRS, if not provided earlier. Same has been incorporated in the NRI questionnaire.

Country of Birth

Country of residence as per tax law

Tax Identification number (TIN)

Where can you find more detailed information on FATCA and CRS?

For further information on FATCA and CRS, please visit www.incometaxindia.gov.in where Central Board of Direct taxes (CBDT) has notified due diligence and reporting rules 114F to 114H under section 285BA of Income Tax Act, 1961.

 

To update your FATCA/CRS details, click here

 

 
 

Get Answers To Common Tax-Related Queries

 
 

Should NRIs file income tax return in India?

NRIs are only taxed on the income they earn in India. This includes salary earned in India or any income from the sale or rent of property in India.

Can NRIs claim TDS refund?

Yes, NRIs can claim a TDS refund of income earned in India. NRI can file an income tax refund if their tax liability is lower than the tax (TDS) that is deducted from Income earned in India.

What is the tax rate* for NRIs in India?

There is no tax charged for a yearly income upto `2,50,000. NRIs are taxed at 5% for income between ` 2,500,000 and ` 5,00,000 per annum. The tax rate is 20% for income between ` 5,00,000 and ` 10,00,000 per annum. Income above ` 10,00,000 per annum is taxed at 30%.

Do NRIs pay property tax in India?

Please ask customer to get in touch with personal tax advisor

Is basic exemption available to NRI?

Yes, NRIs enjoy a basic exemption limit of ` 2,50,000 in a financial year. This limit is uniform for all NRIs regardless of their age (including senior citizens).

Is TDS applicable on insurance payouts to NRIs?

Yes, tax will be deducted at source (TDS) under Section 195 of the Income Tax Act, 1961 on any sum paid under a life insurance policy to Non-Resident Indians ONLY if the policy is not exempt under Section 10(10D). Further, no tax will be deducted for countries where DTAA benefit is available as per Section 90 of The Income Tax Act, 1961, and the customer has submitted complete & valid Form 10F and Tax residency certificate with the company.

What is the rate of TDS?

TDS rates as per section 195 are tabulated as below:

Particulars Tax Rate
Taxable value is up to ₹ 50 lakh 31.20%
Taxable value exceeds ₹ 50 lakh, but up to ₹ 1 crore 34.32%
Taxable value is more than ₹ 1 crore 35.88%

Is PAN mandatory?

Yes, PAN is mandatory to get a TDS certificate and credit in Form 26AS.

What is DTAA and how it can be useful for getting a TDS exemption?

Double Taxation Avoidance Agreement (DTAA) is signed by the governments of two nations to eliminate double taxation on the same income in both the countries. DTAA prescribes, the country in which the income earned from a foreign country will be taxable.

Let us understand this with these examples:

DTAA between India and USA - As per the treaty, other income earned from India will be taxable in India and not USA; hence TDS will be applicable on Other Income as per tax laws in India.

DTAA between India and UAE - As per treaty, Other Income earned from India will be taxable in UAE only; hence TDS provisions of India will not attract, however to avail this benefit the policyholder needs to submit valid TRC and Form 10F.

Payouts under a life insurance / Pension policy (Non-annuity) comes under ‘Other Income’ Article and Annuity is a separate article in DTAA.

Click here to view the list of countries where DTAA is applicable.

What is Form 10F?

Form 10F is prescribed under Income Tax Act, 1961 and is required to be submitted by a Non-Resident Indian with details like Name, Address, Status (Individual, company, firm), PAN, Nationality, Tax identification number / Unique ID number in the country of residence, etc.

To download Form 10F,  click here

What is Tax Residency Certificate (TRC)?

Tax residency certificate (TRC) is a document issued by an authorized Governmental body of a country certifying that the person is a tax resident of the issuing country. TRC issuing authorities are normally the tax / revenue departments of a country. TRC has a validity period and should cover the date of policy payout. There is no prescribed format, every country has its own format.

Who needs to submit Form 10F and Tax Residency Certificate (TRC)?

Form 10F and TRC is required to avail benefit of NO TDS. This benefit is only available if the DTAA treaty with the country of your residence specifies that the income is taxable in other country and not in India. These forms should be submitted by residents of only those countries who have a NO TDS agreement as per DTAA with the country of their residence.
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COMP/DOC/May/2020/185/3657.

 

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*Tax rates are exclusive of surcharge & cesses.
Tax benefits are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
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