## Section 194DA — TDS on Maturity of Life Insurance Policy

### When is TDS Applicable?

TDS u/s 194DA applies only IF the maturity proceeds are NOT exempt u/s 10(10D).

### Section 10(10D) Conditions — Quick Recall

For maturity to be exempt u/s 10(10D), the premium paid in any year should not exceed:

10% of sum assured (for policies issued on/after 01.04.2012)
15% of sum assured (for policies issued on/after 01.04.2013 in case of disability/disease specified)
20% of sum assured (for policies issued before 01.04.2012)

### Decision Flow

1. Check premium-to-sum-assured ratio → is exemption u/s 10(10D) available?

2. If exempt → No TDS u/s 194DA needed.

3. If NOT exempt → Deduct TDS u/s 194DA.

### Rate

TDS @ 2% (w.e.f. 01.10.2024) on the income component (Maturity amount minus premiums paid).

Worked example

### Example 1

Example 1 — Exempt Policy:

A policy was issued in 2015 with sum assured ₹10 Lakhs and annual premium of ₹80,000 (= 8% of SA).

Maturity proceeds: ₹15 Lakhs.

Analysis: Premium (8%) < 10% of SA → Exempt u/s 10(10D) → No TDS u/s 194DA.

Example 2 — Non-Exempt Policy:

A policy was issued in 2014 with SA ₹10 Lakhs and annual premium of ₹1,50,000 (= 15% of SA).

Maturity: ₹18 Lakhs. Premiums paid over years: ₹15 Lakhs.

Analysis: Premium (15%) > 10% of SA → NOT exempt → TDS u/s 194DA applicable on income component of ₹3 Lakhs (₹18L − ₹15L).

⚠️ Common exam mistakes

Bare-Act text Section 194DA r/w Section 10(10D) · Income-tax Act, 1961 · click to expand

For 194DA, TDS is applicable if Maturity is not Exempt u/s 10(10D). For 10(10D), 10%/15% is to be checked.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

Section 194DA - TDS on Life Insurance Maturity

Worked example