Upgrade and Save: Get 10% OFF on CAclubindia Pro Subscription! Use Code: SAVE10 Subscribe Now!

Insurance Policy

26 July 2019

Mr X insurance policy matured in FY 2018-19 and he received Rs 198000 after deducting TDS.....as his policy was not covered by benefit under section 80C and 10(10D).He had paid Rs 120000 as premium towards his policy....

As amount received on this policy is not exempt, it will be taxable in which head and at what amount....??

Reply
Follow
Share

2 Replies

Rohit Bhatia (Accounts Service) (331 Points)
Replied 27 July 2019

in which head other sources income

Upgrade to CAclubindia Pro. Subscribe Now!

Suresh Thiyagarajan (Student) (3986 Points)
Replied 27 July 2019

1. It is well-settled law that insurance maturity amount will be taxable under the head Income from Other Sources. (u/s 56)
2. However, there has been a wide debate on whether any deductions will be allowed on the above maturity amount.
3. According to sec 80C deductions will be allowed towards premium paid on insurance to the extent of 10% of the maturity amount. If the balance amount is not claimed as a deduction, then the same can be claimed as deduction u/s 57(iii) at the time of maturity of such insurance policy.
4. In the above case to the extent of deductions not claimed u/s 80C, the amount of premium paid will be allowed as deductions u/s 57(iii) against maturity amount.
Please correct me if the above interpretation has an alternative view.