I have a money back policy term is 12 yrs sum assured is rs. 10,00,000 & premium is rs.106000/- now i have received money of rs 300000/- as a survival benefit now i have a question that whether rs. 300000/- rs are taxable or any how i have taken deduction of premium of rs 106000/- u/s 80c in my return of income second one is that if i dont have taken benefit u/s 80c of above policy then what will be the effect of taxation of above policy? pl guide me
Hi,
In your case Money back amount is not taxable.
It is totally Exempt u/s. 10 ( 100 d of I.T. Act 1961), as you are only getting your principle amount back, just like a pre-mature Fd or withdrawal from PPF. You might have also received a Letter from the LIC for Tax purpose, stating that the same is exempt. Please do not forget to declare this amount in Returns as "Tax Free incomes"
Hi,
- Premium is 10.60% of sum assured. If the policy is purchased before 31.03.2012, then you are eligible for deduction u/s 80C and money back amount is also exempt u/s 10(10D).
- If the policy is purchased after 01.04.2012, deduction u/s 80C is available upto 10% of sum assured and money back is taxable as premium paid is more than 10% of sum assured. In a nutshell, in your case irrespective of section 80C, amount is taxable u/s 10(10D). Section 10(10D) is independent of 80C.
Thanks
First of all I don't think you are eligible to claim deduction u/s 80C since you can claim deduction only if the amount of premium is 10% of sum assured and in your case the amount is more than 10% so based on this I think the insurance company will deduct TDS on the amount they repay you and because of that you will have to show the entire amount as your income since you have claimed deduction.
If you won't have claimed deduction you could have showed such amount as capital receipt and deduct premium amount from such receipt and declared capital gain income.
If your premium would have been 10% of sum assured they you were not required to pay tax on amount received on maturity.
I have discussed all 3 scenario.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hi,
Hope you are doing well !
Deduction will be allowed only for premiums upto a maximum of 10% of the sum assured for policy issued on or after April 1, 2012. In case of policy issued before March 31, 2012, deduction will be allowed only for premiums upto a maximum of 20% of the sum assured.
Thanks & Regards,
Payal Chhajed
Hi,
If the policy has been purchased before 31.03.2012, then the money received by you on maturity is exempt u/s 10(10D).
10(10D) is independent of section 80C. So, it will not have any impact on maturity proceeds.
Hi,
If you took the policy before 31.03.2012, then the money received by you on maturity is exempt u/s 10(10D).
Regards,
Nikhil.
Any sum received from a life insurance police whether it is money back amount or matured LIC receipt, it is 100% tax free. But you must check that if the policy is before 31–03–2012, the sum insured should be more than 5 times of yearly premium payable and if the policy is taken after 01–04–2012, the sum insured should be more than 10 times of yearly premium paid. Basically it is tax free and you must disclose it in your income tax return under exempt income.
Hi
Any income received from your life insurance policy is exempted from income tax under 10(10d) subject to fulfillment of following conditions.
- The insurance premium paid during any year must not exceed 20% of the sum assured for policies purchased before 1.04.2012
-If the policy is purchased after 01.04.2012, the premium amount should not be more than 10% of the sum assured.
In your case premium is more than 10% so just check the policy purchase date for taxability .
Hope it helps.
