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Tax exemption on insurance pension plan

rajesh (MBA) (97 Points)

04 July 2018

I had surrendered my insurance pension policy valued Rs.315000, out of which i received a credit of Rs.210000 in my account and balance was reinvested in another policy, but tds 1% was deducted for the whole surrender amount. For ITR filing what is the taxable income amount.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 04 July 2018

Check the terms of the policy. Prima facie, 1/3rd of the surrender amount should be tax-exempt.

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rama krishnan (12239 Points)
Replied 04 July 2018

Mr. dhiraj... for academic purpose and to enlighten me only , I'm asking this don't take it otherwise... under which section 1/3rd of surrender amount is exempted

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 05 July 2018

Some pension policies are framed having tax benefit as per sec10(10A) of IT act..

But exact tax liability differ with different products; here this is just an estimate.

Refer: https://www.caclubindia.com/forum/maturity-amount-of-policies-469226.asp

rama krishnan (12239 Points)
Replied 05 July 2018

thanks for clarification Mr. dhiraj

rajesh (MBA) (97 Points)
Replied 06 July 2018

sir, thanks for your kind reply.my doubt is since part of the maturity amount is reinvested, whether the whole maturity amount to be taken as taxable income or the only the amount received in bank. plz clarify

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 06 July 2018

Exact clarification would be available from the insurer, or from the scheme details document. Without referring the details it would be difficult to give any reply.

Generally, the amount reinvested in annuity gets exempted, while 1/3rd of the maturity value of pension scheme is commuted pension and hence exempted. Remaining part is only taxable. But get confirmation from insurer company's helpline &/or website.

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