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194 da?

prakash kumar singh (CA Final) (491 Points)

12 July 2015

Hi all,

Tds has been deducted u/s 194 DA @ 2%,for the proceeds under life insurance policy amounting Rs 42,000.As per section 194 DA,Tds is Deducted only for those policies which donot come under the ambit of Section 10(10D) i.e,Tds is deducted for those proceeds which are not Exempt. Still I have to confirm about the proceeds of Rs 20,58000 that I have Received,Total maturity proceeds was Rs 20,58000 +42000(tds)=Rs 21,00,000.And total premium paid by me is Rs 15,00,000. If its taxable with the entire proceeds received be taxed i.e Rs 21,00,000 or the amount received less premium paid,i.e (21,00,000-15,00,000)=Rs 6,00,000, If yes then under which head??

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2 Replies

Kuldipsinh Jadeja (Job) (357 Points)
Replied 12 July 2015

It is calculated on entire proceeds (i.e. 2% of Rs.21 lakhs) including sum allocated by way of bonus. It would be taxable under the head Income from other source.

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Kuldipsinh Jadeja (Job) (357 Points)
Replied 13 July 2015

As per section 194DA of Income Tax Act, 1961, any person responsible for paying to a resident ANY SUM under a life insurance policy, including the sum allocated by way of bonus on such policy, other than the amount not includible in the total income under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax thereon at the rate of two per cent

Provided that no deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee during the financial year is less than one hundred thousand rupees.

Hence, on entire proceeds TDS has been deducted