Section 10(10D)

Section 10(10D) — the law in short

What the courts have decided on section 10(10D), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CBDT Circular 15/2023 on the Rs 5 lakh premium test CBDT Circulars & InstructionsCuts both ways
  My client holds four life policies with different premiums and different maturity dates. How do I work out which of them still come out exempt under s.10(10D)?
  The circular is the Board's own worked answer to that question. It lays down that the Rs 5,00,000 test is applied afresh in each year in which a sum is received, by aggregating the premium payable on the policy being tested with the premium on every other eligible policy on which exemption has already been claimed, and it tells the assessee he may choose which combination of policies to claim on. It also settles two points the section does not: premium is taken exclusive of GST, and a pure term policy is outside the sixth and seventh provisos altogether and does not count towards the aggregate.
• CBDT Circular 3/2014 - a keyman policy assigned to the keyman stays a keyman policy CBDT Circulars & InstructionsHelps department
  Our company assigned its keyman policy to the director before maturity and he paid the surrender value. Is the maturity money still exempt in his hands?
  No, not where the assignment falls in assessment year 2014-15 or later. The Board's explanatory notes to the Finance Act 2013 record that keyman policies were being assigned to the keyman before maturity so that the proceeds could be claimed exempt under s.10(10D), and state that the clause was amended so that a policy assigned during its term, with or without consideration, continues to be treated as a keyman insurance policy. The change applies from 1 April 2014, that is, for assessment year 2014-15 onwards.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.