LIC insurance maturity proceeds
I have the following query on income tax liability on insurance maturity proceeds:
I am an NRI and have started paying an LIC policy in UAE on 28/07/2007 with a quarterly premium payment of US $ 4961.08 (AED 18,257), Sum Assured is US $ 75,000. Premium Payment term is 5years and maturity date 28/07/2018 (11years).
I have transferred the policy back to India on 24/06/2012 after the policy is fully paid up in UAE, based on my intention that I will move back to India. The conversion rate applied on the date of transfer is US $ 56.99. Accordingly, the Sum Assured has been changed to INR 42,74,250.00
I have received the maturity proceeds on 28/07/2018 for an amount of INR 58,94,786.00 after deducting TDS of INR 59,543.00. I am still maintaining my NRI status continuously.
The Life insurance is continued further until the death. In case of death the amount receivable is INR 42,74,250.00
I have also gone through the Income tax circular no. 7/2003 dated 05.09.20013, but I didn’t understand why do I need to pay income tax on the maturity proceeds if the premium payments made myself is almost equivalent to the maturity amount. (ie US $ 4961.08 x 4 qtrs x 5years x 56.99 = INR 56,54,638.99). I would like to know the tax liability and what action to be taken to mitigate the tax liabilities.
my email address for communication : [deleted]
Sudhakara Kumar M (M S KUMAR)
Asked 3 years ago in Income Tax
You have not answered how the tax will be applied.. Is it on the entire amount received or the premiums paid will be deducted from the amount received before applying the tax on the maturity proceeds..
Asked 3 years ago