Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Income tax on maturity of insurance policy

09 July 2017

I had taken a policy for Rs 2 lakhs in 2010 which matured in Dec 2016, and I received Rs 2,79, 990, for which there's a 1% TDS reflecting in my form 26AS.

Kindly clarify whether I need to pay any more tax on filing my returns.

Reply
Follow
Share

5 Replies

Poltu Ghosh (Job) (1865 Points)
Replied 09 July 2017

yes your premium exceeds 20% of sum assured so it is fully taxable. Your entire proceeds from the policy for Rs 279990 is taxable.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Bijo (NA) (65 Points)
Replied 10 July 2017

Dear Sarah, I believe Rs 2 lakhs was the sum assured and Rs 2,79,990 was the maturity amount. It's not clear what was the total premium paid for the policy. Your taxability also depends on the ratio between total premium paid and sum assured. Can you please provide details on total premium paid, which can help in answering your query.

Sarah Tharyan Fernandes (32 Points)
Replied 10 July 2017

Thanks for your response. I'd paid Rs 2 lakhs as a single premium in 2010..

Sarah Tharyan Fernandes (32 Points)
Replied 10 July 2017

Thanks for your response. I'd paid Rs 2 lakhs as a single premium in 2010..

Bijo (NA) (65 Points)
Replied 10 July 2017

Thank you for the clarity. In that case we need to know what was the sum assured, which could be written in the policy document or first premium receipt as sum assured or coverage or risk coverage.

In your case, Rs 2,79,990 is the maturity amount, which can be different from sum assured. As your policy is taken in 2010, your premium should be less than 20% of the sum assured for it to be tax free. If not, the entire maturity amount will be taxable as per your slab,