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Anil Rego |388 Answers |Ask -Follow

Financial Planner - Answered on Feb 04, 2022

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
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Question by Dinesh on Feb 04, 2022Hindi

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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 Jun 08, 2022

Question by Dinesh - Jun 08, 2022Hindi

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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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Question by Dinesh - Sep 06, 2022Hindi

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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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