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LIC maturity Amount Taxable ?

VINAY GOTEWAL (Finance Manager) (30 Points)

24 January 2021

If one Indian National has taken LIC policy plan 815 and paid premiums but after some years that person went abroad and got citizenship in abroad.

Question is- at time of policy maturity benefits/amount received (foreign citizen) will be taxable or what tratment ?

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8 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 24 January 2021

It will be taxable under other sources

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ayusmita (Tax consultant) (5885 Points)
Replied 24 January 2021

The premium paid on the policy does not exceed 10%of the sum assured for policy issued after 1st april 2012 and 20% of sum assured for polices issues before 1 april 2012 any amounts received on maturity of a life insurance policy or amount received as bonus is fully exempted from income tax under sec 10(10D)
however as you shifted to aboard now it's better to file itr as per indian for only the lic maturity of you don't have any other income related to India

Kapadia Pravin (17259 Points)
Replied 24 January 2021

It won't be taxable. It may credited into bank account in India of that NRI person.

rama krishnan (12239 Points)
Replied 24 January 2021

Concur with Ms. ayusmita

8156046685 (CA FINAL STUDENT) (45 Points)
Replied 24 January 2021

It will be taxable under the head other sources since it is deemed to be arisen in india .
15.3.9 Payment in respect of life insurance policy [Section 194DA]
(1) Taxability of sum received under a life insurance policy
Under section 10(10D), any sum received under a life insurance policy, including the sum
allocated by way of bonus on such policy is exempt subject to fulfillment of conditions
specified under the said section.
Consequently, the sum received under a life insurance policy which does not fulfill the
conditions specified under section 10(10D) is taxable.
(2) Rate of TDS
For ensuring a proper mechanism for reporting of transactions and collection of tax in respect
of sum paid under life insurance policies which are not exempt under section 10(10D), section
194DA provides for deduction of tax at the rate of 5% on the amount of income comprised
therein i.e., after deducting the amount of insurance premium paid by the resident assessee
from the total sum received.
In order to provide more funds at the disposal of the taxpayers for dealing with the economic
situation arising out of COVID-19 pandemic, the rate of TDS u/s 194DA has been reduced
from 5% to 3.75% (i.e., ¾th of the specified rate) for the period from 14th May, 2020 to 31st
March, 2021 [Section 197B].
(3) Threshold limit
Tax deduction is required only if the payment or aggregate payment of under a life insurance
policy, including the sum allocated by way of bonus in a financial year to an assessee is
` 1,00,000 or more. This is for alleviating the compliance burden on the small tax payers.

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Kapadia Pravin (17259 Points)
Replied 24 January 2021

Maturity amount Exempt under 10(10D)

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Krishna Chaudhary (Accountant) (4531 Points)
Replied 25 January 2021

When the premium paid on the policy does not exceed 10% of the sum assured for policies issued after 1 April 2012 and 20% of sum assured for policies issued before 1 April 2012– any amount received on maturity of a life insurance policy or amount received as bonus is fully exempt from Income Tax under Section 10(10D).