The Statutory Brief

IT Act 1961 → 2025 / Section 10(10D)

Exemptions

Section 10(10D) → Schedule II

Exemption for life insurance maturity proceeds (including bonus)

Section 10(10D) of the old Income-tax Act, 1961 · new Schedule II under the Income-tax Act, 2025

New reference Schedule II, Table Sl. No. 2

Income-tax Act, 1961Section 10(10D)

  • Maturity proceeds exempt subject to premium ≤ 10%/15%/20% of sum assured depending on issue date
  • ULIPs issued from 1 Feb 2021: exempt only if aggregate annual premium ≤ ₹2.5 lakh
  • Other policies issued from 1 Apr 2023: exempt only if aggregate premium ≤ ₹5 lakh
  • Death claims always exempt; keyman policies excluded

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Schedule II, Table Sl. No. 2

  • Schedule II, Table Sl. No. 2
  • Same premium-to-sum-assured tests by date of issue
  • ₹2.5 lakh (ULIP) and ₹5 lakh (other policies) aggregate-premium caps retained
  • Caps do not apply to IFSC Insurance Office policies issued from 1 April 2025

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Moved from section 10 into Schedule II with the conditions set out as a date-wise table. Conditions unchanged.

Practice notes

  • Taxable maturity proceeds: TDS at 2% on the income portion (old 194DA → 393(1), Table Sl. No. 8(i)).
  • Taxable ULIP gains are treated as capital gains; check section 67 onwards.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

Is LIC maturity amount taxable under the new Income Tax Act 2025?

It is exempt under Schedule II, Table Sl. No. 2 if the premium-to-sum-assured and aggregate-premium conditions are met (₹5 lakh for non-ULIP policies issued from 1 April 2023, ₹2.5 lakh for ULIPs). Death proceeds are always exempt.

What is section 10(10D) called in the new Income-tax Act, 2025?

Section 10(10D) of the Income-tax Act, 1961 corresponds to Schedule II, Table Sl. No. 2 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 10(10D) under the new Income Tax Act?

Moved from section 10 into Schedule II with the conditions set out as a date-wise table. Conditions unchanged.

Is section 10(10D) still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 10(10D) of the 1961 Act. Schedule II, Table Sl. No. 2 of the 2025 Act applies from tax year 2026-27.

Related sections

80C→123Deduction for life insurance, PF, PPF, ELSS, tuition fees, home-loan principal and other specified savings194D→393TDS on insurance commission112A→198Tax on long-term capital gains from listed equity shares, equity mutual funds and business trust units (STT paid)