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Mihir Tanna |1062 Answers |Ask -Follow

Tax Expert - Answered on Sep 06, 2022

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more

Question by Dinesh on Sep 06, 2022Hindi

I bought an insurance policy with single premium of Rs 97048 and tenure of 9 years. The sum assured was Rs 130,000. Gross maturity proceeds were Rs 11,1348. There were two survival benefits of Rs 19,500 each at 3 year intervals.

In my layman’s understanding, my income from this policy is Rs 11,1348 minus single premium of Rs 9,7048, that is, Rs 14,300. But LIC is deducting TDS by adding the two survival benefits to this, that is, Rs 14,300 plus Rs 19,500 plus Rs 19,500 amounting to Rs 53,300. My question is, should I report Rs 14,300 or Rs 53,300 as my income from this policy while filling my ITR. AIS shows Rs 53,300.

Ans: Money received against insurance policy (which covers life) is fully taxable, wherein the premium is more than 10% (in case policy issued after 1st April 2012 or 20% (any other case) of the sum assured.

As premium paid by you is more than specified limit of sum insured, provisions related to exemption of amount received and deduction of premium paid is not available.

Accordingly, you have to pay tax on entire income i.e. survival benefit and amount received above amount paid by you i.e. Rs 53,300.

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Question by Dinesh - Jun 08, 2022Hindi

Dear Sir, The net maturity proceeds of single premium life insurance policies are now taxable. The question is whether survival benefits paid at intervals during the tenure of the policy are to be included in the “Net Maturity Proceeds” for the purpose of calculating income from a single premium life insurance policy. I bought an insurance policy with single premium of Rs.97048 and tenure of 9 years. The sum assured was Rs. 130000 Gross maturity proceeds were Rs. 111348 There were two survival benefits of Rs. 19500 each at 3 year intervals. In my layman’s understanding, my income from this policy is Rs 111348 minus single premium of Rs. 97048 i. e. 14300. But LIC is deducting TDS by adding the two survival benefits to this i. e. Rs. 14300 plus 19500 plus 19500 amounting to Rs. 53300. My question is, should I report Rs. 14300 or Rs. 53300 as my income from this policy while filling my ITR. AIS shows Rs. 53300.

Ans: You need to consider the total payments (Rs 53,300) including the survival benefits as this is also income to you. Hence, what the insurance company has deducted is correct and is in line with the AIS as well.

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Financial Planner - Answered on Feb 04, 2022

Question by Dinesh - Feb 04, 2022Hindi

I am LIC policy holder of single premium plan (sum assured: Rs 5 lakhs; policy term: 9 years) under which single premium of Rs 3.30 lakh was paid in Nov 2011. Thereafter, survival benefit of Rs 75,000 each was received in 2014 and 2017. The policy matured in Nov 2020 with receipt of net maturity proceeds of Rs 3.77 lakhs. As per my form 26 AS for FY2021 (AY 2022) amount of Rs 2.05 lakhs is shown to be received from LIC against which TDS of Rs 7,688 is booked. (2.05 L = 75k + 75k + 3.77L + 7688- 3.3 L). While filing ITR for FY2021 (AY2022), please let me know if I can show income of Rs 55,000 (net of premium) against LIC maturity proceeds despite form 26AS showing income of Rs 2.05 lakhs?

Ans: Under Section 10 10(D), the entire maturity proceeds will be taxable in the year of receipt and must be shown as income while filing one's income tax return.

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Financial Planner - Answered on Aug 29, 2022

Question by Kanyalal - Aug 29, 2022Hindi

I have paid Single Premium of Rs 100,000 for my son's LIC policy in the year 2012. In the year March 2022, the policy matured for Rs 200,814 and bonus of Rs 12,354. The entire amount was re-invested with additional premium amount of Rs 76,375 as single premium under plan of 917 for 25 years of LIC. Will the difference amount of Rs 100,814 with bonus amount of Rs 12,354 attract tax? If so, under normal tax rate or LTCG? Will the entire amount of Rs 289,543 entitled U/s 80C or only differential premium amount of Rs 76,375 be considered U/s 80C? Shall be thankful for your views.

Ans: Here you have not mentioned the type of policy (ULIP / Traditional) for us to give a detailed analysis.

For life insurance plans issued after April 1, 2012, the exemption from tax on single premium life insurance is valid only when the premium is less than 10% of the total sum assured.

Now, if the policy is taken before April 2012, you could avail the exemptions under Section 10D if the premiums paid in a single year during the policy term are not more than 20% of the sum assured. You will need to show the entire maturity proceeds in your return if taxable.

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