07 February 2012
Sir, a public ltd company (Quoted)have taken a key man life insurance policy in the Name of one of its Director in f.Y.2004-2005 and have paid the premiums till date. Policy is due to maturity in the Financial Year 2014-2015. I want to know whether the Company can now assign the Policy in favour of the life assured without taking any consideration from him as surrender value and if just after assignment the individual surrenders the policy then what will be the tax impact in the hands of company as well as in the hands of the assignee.
07 February 2012
Dear friend, the policy assigned in favour of a director will be treated as perk u/s. 17 of the Income tax Act,1961 and same will be taxed in the hand of director at the time of surrender.
Guest
Guest
(Expert)
07 February 2012
Taxable in the hands of director at the time of surrender and for company there is no tax liability.