Insurers say that tax deduction at source (TDS) on taxable life policies has become more equitable after the Budget. Life insurance policies that do not qualify for tax breaks, such as those without life cover that is at least 10 times the premium amount, will face TDS only on gains following changes proposed in the Union Budget. A provision in the finance bill has revised the TDS on policies that do not qualify for exemption from income tax to 5% of the gain rather than 1% on the total maturity benefit. “In the earlier regime, TDS was applied on the entire maturity benefit, which included both the premium paid by the policyholders and the gains that accrued to them. What has been proposed in the Budget is good for policyholders. Now TDS will be applied only on the gains that have ensued, that is, the premiums paid by policyholders will not attract TDS. It will facilitate smoother tax compliance for policyholders,” said ICICI Prudential Life Insurance chief financial officer.