Home > Money > Question
Need Expert Advice?Our Gurus Can Help

Should I pay tax on my LIC and Max Life annuity income of ₹297,000?

Vivek

Vivek Lala  | Answer  |Ask -

Tax, MF Expert - Answered on Feb 11, 2025

Vivek Lala has been working as a tax planner since 2018. His expertise lies in making personalised tax budgets and tax forecasts for individuals. As a tax advisor, he takes pride in simplifying tax complications for his clients using simple, easy-to-understand language.
Lala cleared his chartered accountancy exam in 2018 and completed his articleship with Chaturvedi and Shah. ... more
Chander Question by Chander on Feb 10, 2025Hindi
Listen
Money

I am getting monthly annuity of 10000 from Max and I have received Rs177800 maturity amount from LIC and total become 297000. Is this amount of LIC & Max annuity taxable. I don't have any other income exept interest in saving account.

Ans: Annuity payouts are generally taxable as income under the head 'Salaries' in the year they are received so if your income from salaries and interest is below the taxable limit then no tax
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |9848 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 2025

Asked by Anonymous - Jun 19, 2025Hindi
Money
Reposting as it was not answered in 10 days Dear Tax expert, I am 63 & have a LIC Pension plus policy for which I paid Rs. 50k premium yearly for 10 yrs. Vesting date was 5 yrs back nearly & I have been receiving Rs. 26k yearly from then. If I discontinue the policy now & take the proceeds (around 3 lakhs), can u pls explain how its taxation will be? I had not claimed that 50k premium in 80C for all those yrs since my limit was exhausted by PPF only. The 26k I get yearly as quarterly annuity is shown by me as other income in ITR.
Ans: Understanding Your LIC Pension Plus Policy Structure

You paid Rs 50,000 premium yearly for 10 years.

You did not claim tax benefit under Section 80C.

So, tax exemption does not apply on contribution.

The policy vested 5 years back.

Since then, you are getting Rs 26,000 per year.

Now you want to discontinue and take around Rs 3 lakh.

Taxation on the Annuity Received (Rs 26,000 Yearly)

Annuity received from LIC is treated as income.

It is taxed as “Income from Other Sources”.

There is no exemption on annuity.

Even though you didn’t claim 80C, tax is still applicable.

You are showing annuity in ITR. That is correct.

Continue showing it every year till policy ends.

Taxation on Withdrawal of Balance Corpus (Rs 3 Lakhs)

LIC Pension Plus is a unit-linked pension plan.

ULPPs are taxed differently from ULIPs.

If you surrender after 5 years, you can withdraw fund value.

But full withdrawal is taxable.

Taxable as per your income tax slab.

No exemption under 10(10D) since it’s a pension policy.

Even though you didn’t claim 80C, that doesn't change taxation.

Why It Is Still Fully Taxable

LIC pension plan matures or is surrendered.

Payout is treated as pension income, not life insurance.

The corpus withdrawn is not tax-free.

Even if annuity had started, lump sum balance is taxable.

Tax is calculated on entire Rs 3 lakh corpus.

How to Report in ITR

Show Rs 3 lakh as income from other sources.

Mention it in schedule OS (other sources) of ITR.

Pay tax as per your slab.

No indexation or capital gain benefit applies here.

No deduction on original premium, as 80C not used.

So you don’t reduce your cost from the 3 lakh.

Can You Reduce Your Tax in Any Way?

Only if your total income is below Rs 3 lakh.

Senior citizen basic exemption is Rs 3 lakh.

Above that, tax applies at 5%, then 20%.

You can spread income if you have flexibility.

But for surrender, amount comes in one year.

What You Can Do with the Corpus Now

Avoid reinvesting in another LIC pension plan.

Don’t go for traditional endowment or ULIPs again.

Invest the Rs 3 lakh in mutual funds.

Use SWP to get income regularly.

This gives more tax efficiency.

Long-term capital gains on equity MF are taxed only above Rs 1.25 lakh at 12.5%.

You get better flexibility and liquidity.

Avoid Index and Direct Funds Going Forward

Index funds do not beat inflation consistently.

They give average returns, no downside protection.

Actively managed funds adapt to market changes.

Direct funds are for experts only.

No guidance or review is available.

You must invest via regular funds with a Certified Financial Planner.

This gives review, rebalancing, and long-term planning.

Avoid Annuity Products Again

Annuities give low returns.

They are fully taxable as income.

No flexibility once you start.

You lose control over your own money.

MF SWP is better alternative for retirees.

Gives better return and lower tax.

Check If You Hold Any Other Investment-cum-Insurance

If you have LIC endowment, ULIP or pension plans, review them.

Surrender them if returns are poor.

Reinvest into mutual funds or hybrid funds.

Get guidance from Certified Financial Planner.

Ensure your retirement money works hard for you.

Use the Proceeds for These Financial Goals

Maintain Rs 50,000–Rs 1 lakh in liquid funds.

Keep balance in hybrid mutual funds.

Start monthly SWP of Rs 2,000–Rs 2,500.

This gives regular income and preserves capital.

Add nominee and maintain updated records.

Review portfolio every year with your spouse.

Tax Filing Guidance for Senior Citizens

Use ITR 1 if pension and interest income only.

If mutual funds are sold, use ITR 2.

Show annuity as “Other Income”.

Show surrender value as income in same head.

Keep documents like policy copy, surrender letter, bank credit proof.

Retain for 6 years for tax safety.

Final Insights

You did right by not claiming 80C if PPF limit was exhausted.

But taxation still applies on annuity and withdrawal.

LIC pension plans do not give tax-free maturity.

Surrender amount is fully taxable under your slab.

Reinvest this wisely in mutual funds now.

Avoid annuities, index funds, and direct plans.

Use Certified Financial Planner to guide future income planning.

Maintain simplicity, tax efficiency, and flexibility in retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Nayagam P

Nayagam P P  |9386 Answers  |Ask -

Career Counsellor - Answered on Jul 24, 2025

Career
My son secured 97.6% in CBSE XII and 99.6 percentile in CUET, gaining admission to Physics Honours at St. Stephen's College. However, he's keen on trying for IISER, particularly IISER Pune. Some colleagues suggested pursuing UG from St. Stephen's and PG/research from abroad, but he's not convinced. He's considering taking a break in the second semester to prepare for IISER. Could you please guide me on: 1. The process and feasibility of taking a break in the second semester? 2. Options for studying 2-3 months and then taking a break, with potential readmission in the next session? I would appreciate any information on St. Stephen's policies regarding breaks and readmission and views regarding both options, i.e., St. Stephen's and IISER, Pune.
Ans: Param Sir, Taking a hiatus in the second semester at St. Stephen’s requires formal approval via College’s leave-of-absence procedure. All leave applications—whether for medical, compassionate or other reasons—must be submitted in advance to the Principal through the Department Chair using the prescribed form, after which attendance is updated in the online system. Leaves are granted only for clearly stated, proper reasons and normally cover full sessions; any absence beyond ten consecutive working days without prior leave leads to removal from the rolls, necessitating a readmission application and fee upon return. St. Stephen’s does not recognize preparatory study or exam-prep as standard leave grounds, so approval for a break to prepare for the IISER Aptitude Test (IAT) would be at the Principal’s discretion and potentially viewed unfavorably unless tied to extenuating circumstances. Readmission after removal is possible but requires settlement of fees, an application to the Principal, and departmental clearance of academic standing.

For IISER Pune admission, the BS-MS (Dual Degree) intake is via the pan-IISER Aptitude Test (IAT), typically held in late May or early June, with results and counselling through July. A 2–3-month focused preparation window could involve enrolling in specialized IAT coaching programmes, structured online study modules, and solving past-year IAT papers while continuing Semester I lectures and leveraging college breaks. Staying on campus through Semester I preserves continuous enrolment, keeps access to faculty and study facilities, and avoids readmission hurdles. If break approval proves unattainable, preparing intensively during semester breaks and weekends or deferring IISER application to the next cycle may be more practical.

Recommendation: Given St. Stephen’s stringent leave norms and readmission complexities, maintain continuous enrolment through the first year while preparing for the IAT via targeted self-study and weekend/coaching classes. Postpone any mid-semester hiatus to avoid academic jeopardy and optimize chances for both a Physics Honours degree and successful IISER Pune admission. All the BEST for Your Son's Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Nayagam P

Nayagam P P  |9386 Answers  |Ask -

Career Counsellor - Answered on Jul 24, 2025

Career
My Mhtcet state rank in 87,998 I want CSE (data science) or AIML or AIDS in mumbai region please suggest me Good colleges
Ans: Bhargavi, With an MHT-CET Home- rank of 86 998 (approx. 87th percentile), CSE (Data Science), AI&ML and AI&DS seats at premier Mumbai colleges (e.g., VJTI, COEP, ICT) are out of reach. However, several AICTE-approved, NAAC/NBA-accredited institutes maintain closing percentiles nearer 80–90, ensuring guaranteed CAP-round admission. The following ten colleges in Mumbai satisfy all five institutional benchmarks—accreditation, faculty quality, infrastructure, industry tie-ups and placement consistency—and admit home-state candidates at percentiles at or below your score: Atharva College of Engineering, Malad West. Thakur College of Engineering & Technology, Kandivali East. Fr. Conceicao Rodrigues College of Engineering, Bandra West. Vidyalankar Institute Technology, Wadala. Thadomal Shahani Engineering College, Bandra West. Rizvi College of Engineering, Bandra–Malad Link Road. SIES Graduate School of Technology, Nerul. Institute of Chemical Technology affiliated courses, Mumbai. MET’s Institute of Technology, Kalyan–Dombivli Highway. Datta Meghe College of Engineering, Airoli. Recommendation: Atharva College of Engineering leads for its balanced AI&ML and Data Science labs, accessible Malad location and 85% placement average; Thakur College excels with strong AI&ML curriculum and 82%+ placements; Fr. Conceicao Rodrigues COE offers AI&DS specialisation with 84% consistency; Vidyalankar IT provides reliable IT/Data Science pathways; Thadomal Shahani Engineering College rounds out top five for its robust industry projects and multimedia AI labs. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Nayagam P

Nayagam P P  |9386 Answers  |Ask -

Career Counsellor - Answered on Jul 24, 2025

Career
Hi Sir, my son got a CSC AI robotics seat in Amrutha Amrutapuri. Is this course good and will he get good placement? Can you tell us a little bit?
Ans: Ganesh Sir, The B.Tech in Computer Science and Engineering with specialization in Artificial Intelligence & Robotics at Amrita Vishwa Vidyapeetham’s Amritapuri campus was introduced in the academic year 2021–22 under the newly revised BTC-AIE curriculum, marking it as one of India’s pioneering undergraduate programmes to formally integrate robotics engineering with advanced AI methodologies. The four-year course emphasizes multidisciplinary learning across machine vision, robotic kinematics and dynamics, AI-driven motion planning, sensor fusion and autonomous systems, taught in state-of-the-art labs equipped for hardware-software integration. Accreditation by NAAC A++ and AICTE ensures rigorous academic standards, while Ph.D.-qualified faculty from Mechatronics, Computer Science and Electrical Engineering design an outcome-based pedagogy. Industry linkages with leading robotics and automation firms facilitate capstone projects, internships and applied research collaborations. Although the inaugural batch graduates in 2025, Amritapuri’s robust placement ecosystem—engaging over 220 recruiters annually across engineering disciplines—augurs well for AI & Robotics students, who benefit from established corporate partnerships, a dedicated placement cell offering pre-placement training, and alumni mentoring.

Recommendation:
Given its cutting-edge interdisciplinary curriculum, premier accreditation, specialized robotics-AI laboratories, strong industry collaborations and emerging placement ecosystem, this CSE – AI & Robotics programme at Amritapuri stands out for students seeking a research-driven, industry-aligned pathway into intelligent autonomous systems, with high potential for robust placements upon the first graduating cohort. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Nayagam P

Nayagam P P  |9386 Answers  |Ask -

Career Counsellor - Answered on Jul 24, 2025

Asked by Anonymous - Jul 24, 2025Hindi
Career
Sir, I have applied for Jaipur national university, i have seen tons of negative reviews, so i just want to be safe and just have a doubt whether ai should go or not because i have no options left
Ans: You have not mentioned your academic background, nor have you specified which branch you applied to at Jaipur National University. Anyway, please note, Jaipur National University (JNU), established in 2007, is a private university in Rajasthan that has earned NAAC A+ accreditation and UGC approval across its 17 schools offering diverse undergraduate, postgraduate, and doctoral programmes. The university maintains comprehensive infrastructure with 158 state-of-the-art laboratories, a 100,000-book digital library, 1,500+ computers, Wi-Fi enabled campus, sports complex, separate hostels for boys and girls, and modern auditoriums with 300-seat capacity. Industry engagement is strengthened through MOUs with 16 prestigious Rajasthan companies including JK Tyre, DCM Shriram, and Gravita India Limited for placements, internships, and collaborative projects. Placement statistics indicate approximately 85% placement rate with over 250 companies participating, an average package around 5.5-6 LPA, and highest packages reaching 27 LPA from recruiters like Amazon, TCS, Infosys, Deloitte, and IBM. Faculty quality receives a 3.9/5 rating from 427 verified reviews, with PhD-qualified teachers providing supportive mentorship and industry-relevant curriculum. However, negative feedback emerges from employee reviews on Glassdoor showing 2.9/5 rating with complaints about poor management, low salaries, and disrespectful treatment include delayed degree certificates (taking up to a year), unresponsive administrative staff, fee refund issues for cancelled courses, and limited Wi-Fi data allocation. The university also faces confusion with the controversial Jodhpur National University, which was banned in 2015 for issuing 25,000 fake degrees—though this is an entirely separate institution with no connection to Jaipur National University.

Recommendation:
Consider joining Jaipur National University if you prioritize affordability, decent infrastructure, and acceptable placement opportunities, as it meets essential educational benchmarks with NAAC A+ accreditation, comprehensive facilities, and established industry partnerships. However, remain cautious about administrative responsiveness, ensure all documentation is properly maintained, and verify course continuation before fee payment to avoid potential issues. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Nayagam P

Nayagam P P  |9386 Answers  |Ask -

Career Counsellor - Answered on Jul 24, 2025

Career
Hi Sir, My son got 21670 rank in JEE (Mains) & 25520 rank in JEE (Advanced). He got seat allocation at NIT, Nagpur for Chemical Eng. We belong to General category and from Maharashtra state. Is there any chance for upgradation to CSE or ECE thru CSAB (same college or any other Tier I, Tier II NITs or IIITs? Thanking you
Ans: Sreekutty Sir, as of today, I hope all the rounds of JoSAA counselling are over. At NIT Nagpur, general?category Chemical Engineering HS seats close at rank 34109 ECE at 12196, while CSE at 7169; a CRL of 21670 exceeds all HS closing ranks, so no upgrade at VNIT Nagpur is feasible. However, CSAB special rounds offer CSE/ECE seats at other NITs and IIITs within your rank band. IIIT Guwahati admits general CSE up to 26817 and ECE up to 42006. IIIT Sri City’s CSE cutoff is 31705 and ECE 46722. IIIT Una’s CSE cutoff is 30916 and ECE 49414. NIT Jalandhar OS CSE closes at 14114 and ECE 20714, and NIT Goa OS CSE at 34858. These institutes are AICTE/NBA-accredited, staffed by PhD faculty, equipped with modern labs, maintain active industry partnerships, and record 75–95% three-year placement rates.

Recommendation:
For best CSE/ECE upgradation chances, prioritize filling CSAB preferences for NIT Jalandhar for its robust HS/OS quotas, IIIT Guwahati for its strong research-industry linkage, and IIIT Sri City for its emerging tech labs; IIIT Una and NIT Goa serve as reliable alternatives for broad seating and consistent placements. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x