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Taxability of lic maturity ?

RAHUL (Student CA Final ) (377 Points)

25 January 2016

What will be the taxability of LIC Maturity if it is not exempted u/s 10 (10) d.

1. Is the whole amount taxable?

2. Or the maturity receipts less the premiums paid is taxable?

Any sources for your replies will be appreciated..

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10 Replies

Sachin (student) (214 Points)
Replied 25 January 2016

The whole amount will be taxable.

Understand Section 10(10D) of Income Tax Act applicable on maturity of Life Insurance Policies.
As per the section maturity of LIC policy will be included in the income of the Individual i.e. it is taxable if
"the policy where premium in any year is more than 20% of the sum insured if it were bought after 1st April 2003 but before 31st April 2012 or is more than 10% of the sum insured if it were bought after 1st April 2012.
However, Death benefits on maturity will continue to be exempt from tax"

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Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 25 January 2016

Maturity amoun less premiun paid

lets see others view also

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 25 January 2016

on what grounds the exemption u/s 10(10D) is not available?

viz for annuity or pension policies no benefit is available except 80CCC at the time of deposit,

put specfic type for better result

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 25 January 2016

Read my article section 194DA some clarification needed.

ganeshan k (asst mgr) (94 Points)
Replied 26 January 2016

I endorse the views submitted by Mr. Sachin in trailing.

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gautam thakur (employee) (111 Points)
Replied 27 January 2016

Whole amount of LIC maturity is taxable. Deductions were claimed in the year of payment under 80C , so no deduction in year of maturity.

gautam thakur (employee) (111 Points)
Replied 27 January 2016

Whole amount of LIC maturity is taxable. Deductions were claimed in the year of payment under 80C , so no deduction in year of maturity.

RAHUL (Student CA Final ) (377 Points)
Replied 27 January 2016

Exemption is not available as the premium amount exceeds 20% of sum assured.

I don't think the entire amount should be taxable as it would amount to double taxation. The amount invested was probably taxed once when it was earned.

Kamal vashist (Accountant) (183 Points)
Replied 27 January 2016

if the premium you are paying is 10% or less of the sum assured/death benefit then you can enjoy the benefit of section 80c and 10(10d).

Case 1: Rajan has one Life insurance policy, bought in 2005, with annual premium of Rs 50,000/-. The policy has sum assured of Rs 3 lakh. The policy is due to mature next year in 2015. He wants to know if the maturity proceeds be taxable?

Answer: NO. As the policy was bought before April 2012, and has sum assured more than 5 times of premium amount, then it satisfies the condition of section 80C and 10(10d) and thus is not taxable.