03 September 2008
Suppose life insurance taken in 2005 for a sum assured of Rs 1 lakh with annual premium of Rs 25,000.
In 2015 policy got matured and recd 5 lac from the insurance co. How much amount will be taxable in 2015 since the premium amount was more than 20% of sum assured ?
Secondly, had the whole 5 lac be tax free if in case policy was taken before 1.4.2003
04 September 2008
The whole amount will be taxable. As the the words used for exemption are 'any sum received' which means either whole amount is exempt or taxable. Further, the amount would not have been taxable in case the policy would have been taken before 1.04.2003.
04 September 2008
Sorry Sir, how can whole 5 lac be taxable. If I am not wrong we treat LIC premium paid as investment. So, in that 5 lac, assessee is getting back his own money to the extent of 2.50 lac. So actual gain/profit is only 2.50 lac.
How can the assessee be charged tax for getting back his own money. Income Tax is charged only on income na.
If still whole 5 lac will be taxable..isnt it a big flaw in the act
CAclubindia
