Tax on LIC Jeevan Saral Maturity: Confused 45-Year-Old Needs Help

Ans: There is no TDS on NSC. It is self declared

Ans: The LIC Jeevan Anand policy provides tax benefits to the insured individuals on the premium paid, as well as on the claims that are received.

This benefit is applicable under Section 80C and Section 10(10D) of the Income Tax Act. Any income received by you is required to be reflected in the ITR, even if tax-free, in the suitable column of ITR.

Ans: You're right, there seems to be a misunderstanding regarding the TDS deduction on your Jeevan Asha-II policy maturity amount. Here's a breakdown:

TDS on Maturity: Generally, for pre-2014 ULIPs and traditional endowment plans like Jeevan Asha-II, maturity proceeds are exempt from tax if the annual premium doesn't exceed 20% of the sum assured. In your case, the premium amount seems to be well below the 20% limit.

Possible Reasons for TDS: There could be a few reasons for the TDS deduction:

Technical Error: An error in LIC's system might have triggered the TDS deduction.
Change in Rules: While the rule generally applies to pre-2014 policies, there might have been a specific clarification or change applicable to your policy.
Recommendations:

Contact LIC: Get in touch with LIC's customer care or your agent. Explain the situation and the relevant tax rule. Request clarification on the reason for TDS deduction and explore the possibility of a refund if it was an error.
Tax Return Filing: While filing your Income Tax Return (ITR), you can mention the maturity amount received, the TDS deducted (Rs. 16,180), and the exemption clause applicable to your policy (premiums below 20% of sum assured). This will help you claim the deducted TDS amount if it wasn't justified.
Calculating Your Tax Liability:

Since the maturity amount is likely exempt from tax, you don't need to calculate any additional tax liability on it (assuming you haven't received any taxable bonuses). However, your total income for the year will determine your tax bracket (30% in your case) and the tax applicable to your other income sources.

Remember: For specific advice on your situation and the possibility of an LIC error or rule change, consulting a tax advisor familiar with LIC policies and tax rules for pre-2014 plans might be helpful.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: Hello;

General Comments:
Jeevan Saral is an ideal example as to why people should not buy traditional endowment policies even for life insurance forget about investments.

It is an endowment policy that offers cover for long terms. However some people noticed that on maturity the lumpsum money they received from the policy was less than the sum of all premiums they paid during the policy period.

It was argued by LIC that as people grew older the premium allocation towards mortality risk was higher hence the people received less sum at maturity then total of premiums paid.

Matter went to Supreme court since people felt cheated. But LIC had all things mentioned in the policy document so they couldn't be indicted.

Later LIC closed this plan due to the negative publicity.

Specific comments:
Talk to your agent about this and he will process it by getting your kyc and neft details, original policy certificate and duly filled surrender form.

I believe it will have to be done only at the base branch from where your policy was issued.

Whatever money you are getting as surrender value( should be between 4-5L), consider it as God's blessing and reinvest it elsewhere.

Best wishes;