Tax Benefits for NRIs
Tax Benefits for NRIs
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 under Section 80C and money received from your life insurance policies subject to Section 10(10D).
*Tax benefits are subject to conditions of Sections 80C, 10(10D), 115BAC & other provisions of the Income Tax Act, 1961, and are subject to amendments made thereto from time to time. Please consult your tax advisor for more details.
TDS
What are the Tax benefits for an NRI life insurance customer?
NRI customer can also claim deduction under section 80C of Income Tax Act, 1961 in respect of life insurance premium, subject to conditions prescribed under income tax provisions.
Can NRIs claim a credit of Tax deducted at source?
Yes, NRIs can claim a credit of tax deducted at source provided their PAN is updated with records of company before processing of payout.
Whether basic exemption is also available to NRIs?
Yes, NRIs enjoy a basic exemption limit of ₹2,50,000 in a financial year subject to conditions prescribed under Income Tax Act 1961.
Is TDS applicable on life insurance payouts to NRIs?
TDS is applicable only where payouts from life insurance policy is not exempt under section 10(10D) of Income Tax Act 1961.
Is TDS applicable on Interest accrued/paid to NRI under Insurance policy?
Yes, TDS is applicable on Interest accrued or paid under Insurance policy. Interest payout is taxable irrespective of the fact that policy is compliant with exemption conditions prescribed section 10(10D) of Income Tax Act 1961.
Is PAN mandatory for NRI?
NRI must furnish either PAN or Form 60. However, PAN is mandatory if Non-agricultural (Income earned within India) is exceeding ₹ 2,50,000. However, in case of taxable payouts, PAN is mandatory to get a TDS certificate and claim credit of TDS.
What is DTAA and how it can be useful for getting a low or nil TDS rate?
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 foreign country will be taxable. In case payout is taxable and DTAA benefit is available then customer needs to submit E filled form 10F and Tax residency certificate (TRC) to claim benefit of low/nil rate of TDS at source as per treaty.
What is E filed 10F?
E filed 10F is one of the essential documents to claim DTAA benefit. Customer can file Form 10F through Income tax portal.
What is Tax Residency Certificate (TRC)?
Tax Residency certificate (TRC) is a document issued by an authorised 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 E filed 10F and Tax Residency Certificate (TRC)?
E filed 10F and TRC are required to avail DTAA benefit. This benefit is only available if the respective DTAA treaty specifies that the particular nature of income is taxable in the country where customer is tax resident or prescribed reduced TDS rate.
Can customer submit any form such as E filled 10F or Tax residency certificate for claiming double tax agreement benefit?
No, Customer need to submit both documents, i.e. valid E filed 10F & Tax residency certificate for claiming double tax agreement benefit.
At what frequency customer need to submit these forms?
Usually Tax residency certificate & E filed 10F have validity period, once validity period is expired customer need to submit fresh documents before processing any taxable payouts.
How is it decided whether the person is a tax resident of a particular country or not?
Tax residency of a person can be determined by referring to Tax residency certificate
What is time period within which we get TDS certificate?
Time period for getting TDS certificate is as under:
Period of Tax deduction |
Certificate will be available by |
|---|---|
Q1 (Apr- Jun) |
15th August |
Q2 (Jul- Sep) |
15th November |
Q3(Oct- Dec) |
15th February |
Q4(Jan- Mar) |
15th June |
Why value reflecting as amount paid or credited in TDS certificate is not matching with Actual amount received in bank account?
As per Income tax provisions in respect of taxable payouts from life insurance policies to individual customers, tax is required to be deducted on net income from policies. Net Income (Taxable Income) means total cumulative payout minus total premium paid by customer. We have deducted tax on such net income and the same is reflected in TDS certificate.
Whether transfer of fund is taxable?
Transfer of fund (TOF) is a mechanism wherein proceeds from one policy gets transferred to other policy. In such scenario taxability will be same as normal payout.
Are annuities taxable for NRI?
Yes, annuity paid to NRI customer is taxable and tax is required to be deducted at source on gross proceeds as per section 195 of Income Tax Act 1961.
What are rates of TDS applicable for NRI as per section 195 of Income Tax Act 1961?
TDS rate applicable for NRI holding a Unit Linked insurance policy from 1 April 2025.
Particulars |
PAN link to Aadhaar/PAN Aadhaar Linking Not applicable |
PAN not linked with Aadhaar/ PAN not available/Invalid PAN |
|---|---|---|
Taxable Income up to 50 Lakhs |
13% |
20% |
Taxable Income 50 Lakh to 1 Crore |
14.30% |
|
Taxable Income Exceeding 1 Crore |
14.95% |
TDS rate for NRI holding an insurance policy other than ULIP like Term, Annuity, Pension & Endowment
Taxable annual payouts |
TDS rate |
|---|---|
Taxable Income up to 50 Lakhs |
31.20% |
Taxable Income 50 Lakh to 1 Crore |
34.32% |
Taxable Income 1 Crore to 2 Crore |
35.88% |
Taxable Income 2 Crore to 5 Crore |
39.00% |
Taxable Income Exceeding 5 Crore |
42.75% |
Whether Tax treatment is different for NRE & NRO accounts?
There is no difference in tax treatment in respect of life insurance payouts to either NRE or NRO account.
What is the tax treatment for NRIs investing in ULIPs?
In case NRIs purchase ULIP policy on or after Feb 01, 2021, then:
- If single policy is purchased
- Proceeds from these policies will be exempt if BOTH the below conditions are satisfied:
- Premium to sum assured ratio is 1:10 and
- Premium payable does not exceed ₹ 2,50,000 per financial year during term of the policy
- Proceeds from these policies will be exempt if BOTH the below conditions are satisfied:
- If Multiple policies purchased
- Proceeds from these policies will be exempt if BOTH the below conditions are satisfied:
- Premium to sum assured ratio is 1:10 and
- Exemption will be available only in those ULIPs where the aggregate premium payable at client/PAN level does not exceed ₹ 2,50,000 in a Financial Year during the term of any of those policies.
- Proceeds from these policies will be exempt if BOTH the below conditions are satisfied:
What is rate of Tax deduction applicable in NRI for Unit Link Insurance policy taxable under the head Income from Capital gain?
Rate of TDS in Unit Link Insurance policy (ULIP) which is issued on or after 1st Feb 2021 wherein premium payable for any of the year during the term of policy for ULIP issued on or after 1st Feb 2021 is exceeding 2,50,000 will be determined whether it is long term capital Asset or short-term capital Asset.
- In case of long-term capital Asset (Holding period of policy more than 12 month) Tax will be deducted at source at the rate of 12.5% plus surcharge and cess on net Income. No Indexation benefit and threshold benefit applicable.
Above mentioned rate is applicable for all category of fund
How is the TDS calculated in case of a surrender payout to an NRI customer?
In case payouts from policy is exempt as per section 10(10D) of Income Tax Act 1961 then no tax will be deducted. In case of taxable payouts from life insurance policies, TDS will be calculated on net Income i.e. (Total cumulative payout Minus Total premium paid by customer) as per section 195 of Income Tax Act 1961. In respect of annuities TDS will be calculated on gross payouts.
Do proceeds from single premium policies having premium in excess of Rs 5 lakhs qualify for exemption u/s 10(10D)?
Non-Unit link Insurance policies which are issued on or after 1st April 2023 wherein aggregate premium payable for any of the year during the term of policy exceeds 5 lakh is not exempt under section 10(10D) irrespective of the fact the sum assured is 10 times of annual base premium and will be taxed as Income from other sources as per respective individual slab rates.
GST
How do I apply for GST benefit?
NRI customers can apply for GST benefit in 3 simple steps:
- Visit https://www.iciciprulife.com/services/nri-gst-refund.html and enter your details
- Enter the OTP and & fill the form
- Upload required documents.
What are the conditions for GST benefit*?
GST benefit* is applicable for NRI customers that fulfils below mentioned Qualification Criteria’s.
- The residential status of the policyholder should be Non-Resident Indian
- Entire premium payment should be made from an NRE bank account of the policyholder
- Required documents are submitted
Note: For ULIP policies the GST benefit will be available only on premium allocation charge and its benefit would be provided by way of equivalent addition of units to the customers fund within 15 days.
What are the documents to be submitted while placing a request for benefit*?
Documents to be submitted while placing request for GST benefit*:
- Scanned copy of duly signed GST declaration form (Click here to download form)
- Proof of the NRE account from which the premium is debited:
- Bank account statement (must include the premium payment transaction) or
- Letter from the bank confirming account type as NRE account and premium paid transaction from the same account
- International address proof (Mailing or Permanent)
- Valid Passport
- Valid PIO card/OCI card
- Utility Bills (Not more than 2 months old of any service provider. Only electricity, telephone, postpaid mobile phone, water bill, and piped gas bill)
- Bank Account Statements (Not older than 3 months – for a period of 45 days with minimum 1 customer induced transaction.) – It should not have employer address
- Driving/License having holder’s name, date of birth, address, photo & the expiry date.
- Leave & License agreements/Letter of allotment of accommodation.
- Documents issued by government departments of foreign jurisdictions (Valid ID Documents issued by a government authority).
- Property or Municipal Tax receipt – It should be in the name of proposer and not older than one year
What is the turnaround time for processing?
The benefit* will be processed within 7 days of policy issuance or date when request is received with all required documents, whichever is later.
Can NRI subsequently seek benefit* of GST charged by the Life Insurance company?
Request for GST benefit* should be raised in the same month in which premium is due along with required documents.
Can NRI customers avail GST benefit* on premiums paid via Indian account?
For GST benefit* kindly refer qualification criteria mentioned above
FATCA & CRS
What is Foreign Account Tax Compliance Act (FATCA)?
The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that obliges U.S. citizens, including those residing outside the United States, to disclose their foreign financial accounts. The Government of India (GOI) entered into a Model 1 Inter-Governmental Agreement (IGA) with the United States on July 9, 2015, requiring financial institutions in India to adhere to FATCA.
What is Common Reporting Standard (CRS)?
Common Reporting Standard (CRS) is an international standard for the automatic exchange of financial information, developed in the context of the Organisation for Economic Co-operation and Development (OECD). The Government of India has also become a signatory to the Multilateral Competent Authority Agreement (MCAA) on June 3, 2015, compelling Indian financial institutions to comply with CRS.
Who is impacted by FATCA/CRS?
It is applicable to all policyholders, whereby any one of the following conditions is satisfied:
- 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 to transfer funds to an account domiciled outside India.
- Power of attorney or signatory authority granted to a person with an 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 details will be mandatorily required at the time of policy purchase and at the time of policy renewal as defined under FATCA/CRS, if not provided earlier or there is change in detail as compared to earlier. The same has been incorporated in the NRI questionnaire.
- Current Address Outside India
- Phone Number Outside India (With Country Code)
- Place & Country of Birth
- Country of residence as per tax law
- Country of Nationality
- Tax Identification Number (TIN)
- TIN Issuing Country
Where can you find more detailed information on FATCA and CRS?
For further information on FATCA and CRS, please visit https://incometaxindia.gov.in/pages/acts/income-tax-act.aspx where the Central Board of Direct Taxes (CBDT) has notified due diligence and reporting rules 114F to 114H under Section 285BA of the Income Tax Act, 1961.
What is Tax-payer Identification Number (TIN)?
Tax-payer Identification Number (TIN), is an identification number allotted to ensure the unique identification of the person/entity for tax purposes and is allotted by tax department/governmental bodies of respective countries of tax residence. E.g., in India it is known as PAN: Permanent Account Number, in USA it is known as SSN/EIN/ITIN, in UK it is known as UTR, etc.
What is TIN issuing country?
Name of the country mentioned on TIN card as issuing country. E.g., If a person is earning income from different countries, may have TIN of all these countries and accordingly TIN issuing country will be different for each TIN.
What is the penalty for providing inaccurate or false information?
Penalty of ₹ 5,000/- will be imposed by the Income Tax Authority on the Company under Section 271FAA of the Income Tax Act, 1961 for each reportable account if inaccurate or false information is furnished. The reporting financial institution is entitled to recover such a penalty from the policyholder.
Will this data be shared outside the organization? /What company will do with this data?
Yes, the Company is required to file this data with Income Tax Authority on annual basis.
How can customer modify/amend/revise the earlier submitted information?
To modify/amend/revise the earlier submitted details, please send the revised details along with the applicable documents to lifeline@iciciprulife.com
Do I require to provide this information every year?
No, however you must provide this information as and when there is change/addition to it.
What address proof do I have to submit for “Address Outside India”?
Following address proof will be accepted as communication address:
- Valid Passport,
- Valid Driving License,
- Voter's identity card issued by respective country,
- Job card, OCI (Overseas Citizens of India) card or any government issued document containing the address of the customer or a letter issued by the Foreign Embassy or Mission in India containing the name and address of the client.
- Valid Visa/Work permit/Resident Card with name and complete address.
- In case of PIOs: PIO card/OCI card
- Utility Bills (Not more than 2 months old of any service provider. Only electricity, telephone, postpaid mobile phone, water bill, and piped gas bill)
- Bank Account Statements (Not older than 3 months – for a period of 45 days with minimum 1 customer induced transaction.)
- Driving/License having holder’s name, date of birth, address, photo & the expiry date.
- Leave & License agreements/Letter of allotment of accommodation.
- Documents issued by government departments of foreign jurisdictions (Valid ID Documents issued by a government authority.)
- Property or Municipal Tax receipt.
Are all three TINs mandatory to provide?
Policyholders are required to submit details for all Tax Identification Numbers (TINs) they possess. However, if they hold fewer than three TINs from different countries, they need to provide only those TINs.
Is there a due date for submission of FATCA/CRS?
The statutory due date for filing the return for the company, for a calendar year is 31 May of the next calendar year. However, these details if not submitted, can be demanded by the Government and failure to provide the data may lead to non-compliance with FATCA/CRS regulations on the policyholder's part.
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