Lic maturity proceed

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Querist : Anonymous

Querist : Anonymous (Querist)

05 September 2017 if TDS has been deducted from maturity amount of LIC then what will be tax consequences?how it will be shown in income tax return?

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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05 September 2017 Same is shown in exempted income & tds is claimed as refund.

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2017 thank you very much mam for reply,but mam i am bit confuse because after posting query i called to income tax TRPS,they told me to show above income in IFOS as TDS has been deducted.my doubt is that is it all the time necessary that when tds has been deducted then it is a taxable income or deductor has made mistake?please mam guide me in this regard in reference to LIC maturity receipt...

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CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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07 September 2017 LIC maturity is exempted always except in certain cases. However LIC Co compulsorily deduct TDS on all maturity proceeds. So income is exempted.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2017 Thank you very much mam for sharing this practical approach...

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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07 September 2017 Welcome..........

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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11 September 2017 If LIC had deducted tax at source then it means your policy does not fall in Sec. 10(10D) and the full amount received is taxable. It will have to be shown under Income from Other Sources.
LIC does not deducted tax if the proceeds are exempt u/s 10(10D) or the amount does not exceed specified limit.

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RAJA P M

RAJA P M (Expert)
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11 September 2017 Yes. I agreed to Mr CA Sunil Gokale... All LIC maturity amount is not exempted. Some Insurance maturity amount under taxable. So, they deduct TDS....

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Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2017 Thank you very much sir to both of you for your reply, sir is there any mechanism for checking whether policy is covered under which category taxable or exempted? In my case premium for the policy has been paid in one lump sum payment at the time of investment, so here criteria of 20% or 10% is not applicable... Please help me in this regard..

RAJA P M

RAJA P M (Expert)
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11 September 2017 I think you ll be check it in Lic portal or ask your agent or to move directly in Lic office. They ll help you....

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2017 Thank you sir for your quick reply...

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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12 September 2017 Single premium policies are taxable. 20%/10% rule applies to this policy also. The premium will definitely be more than the given % as compared to the sum assured and hence policy proceeds are taxable.

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Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2017 Thank you very much sir for this accurate clarification...

Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2017 Please help me with my one more question is whether maturity proceed of single premium policy issued before April 2003 will be taxable or exempt?

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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13 September 2017 Under normal circumstances, for policies issued on or after April 1, 2012, the exemption is available only if the premium amount in any financial year does not exceed 10 per cent of the actual capital sum assured. This is applicable to all life insurance policies, including SPLI.The maturity proceeds from the single premium life insurance policy will be tax-free only if the minimum sum assuredthroughout the policy term remains at least 10 times the single premium paid. So if the sum assured on single premium life insurance policies is 1.25 times the premium amount, then the maturity proceeds will be taxable." Illustratively, if the premium is Rs 10,000, the life cover (sum assured) should be Rs 1 lakh for the maturity proceeds to be tax-free. If, say, the sum assured is Rs 12,500 or Rs 90,000, the policy loses the tax benefit under Section 10 (10D). Therefore, make sure the sum assured is at least 10 times the premium amount. If this condition is not met, then the entire maturity proceeds are fully taxable in the year of receipt. It has to be shown as income while filing one's income tax return. "The only exception in this case is the proceeds from life insurance plan arising due to the death of the policyholder are exempt from tax irrespective of the level of the premium,"

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Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2017 Thank you mam for the information but my question is whether maturity proceed of single premium policy issued before April 2003 will be taxable or exempt?

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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13 September 2017 Exempt....... ...

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2017 Thank you mam for the quick reply....

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2017 This is for all the expert. One more doubt raised in my mind is that whether premium paid on life insurance policy being subject to tax shall be excluded from maturity proceed for computing taxable income? Your guidance is needed here...

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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14 September 2017 No...........................................

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2017 Thank you mam for your reply but I had read a circular No. 7/2003, dated 5-9-2003 of the income tax act as per which premium paid will be excluded from maturity proceed for computing taxable income... Please give me guidance with respect to that...