Taxability of amount received on policy maturity

This query is : Open

SUMIT JAIN (Querist)
Follow

27 December 2011 dear ir,
a party who was salary person & he received salary from the oriental ins.co.he was death in 2009..nw his family received a claim of rs.415000 of policy & as per 26as tds has been deducted rs.18000..
sir i want 2 know that how to apply effect of policy amount received & that amount is received with interest..but party doesnt know the interst amount included in rs.415000..whether the interest amount received on that is taxable?or fully princial+interest amount is exempted?in which section?

Aditya Gopinath V

Aditya Gopinath V (Expert)
Follow

28 December 2011 Under the current income tax act, 1961 the interest on proceeds of the life insurance policy are exempted.. So the amount of tds on interest amount can be claimed as refund..

CA Chandra Kishore Bajpai

CA Chandra Kishore Bajpai (Expert)
Follow

28 December 2011 I understand that Interest received would be taxable while amount of sum assured received on account of LIC Policy shall be exmpt.{section 10(D) of IT ACT}
Interest amount can be extracted from TDS certificate issued by LIC as TDS should have been deducted on Interest portion only.

Upgrade to CAclubindia Pro. Subscribe Now!