In case of maturity payout/claim for Life Insurance products- traditional or ULIP: Is there any difference in the payout if a person insured is Resident Indian or NRI or OCI? How is the TDS applicable in these scenarios?
If a life insurance policy has sum assured which is less than 10 times of annual premium then the surrender amount or maturity amount of such policies are taxed. The amount is added to the respective Financial year’s income and is taxed as per the applicable income tax slab rate.
In case if the policy is issued before April 2012 then the condition is minimum 5 times of annual premium.
So, if the proceeds are taxable and amount is greater than Rs 1 Lakh, TDS is applicable at the rate of 30% for NRIs.
For Resident Indians, the tax rate is 2% (if PAN number is submitted), else it is 20%.