Taxability of proceeds from Insurance policy

Hi, Please refer the following section in income tax i.e. Sec 10 (10D) (Incomes not included in total income):

(10D) any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, other than—

(a) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA; or

(b) any sum received under a Keyman insurance policy; or

(c) any sum received under an insurance policy issued on or after the 1st day of April 2003 but on or before the 31st day of March 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured; or

(d) any sum received under an insurance policy issued on or after the 1st day of April 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten per cent of the actual capital sum assured:

You have paid a premium of Rs. 180000 against sum assured of Rs. 1200000 which is more than 10% as specified in (d) above hence this amount will not be liable for tax as per my opinion. You can claim refund of the tax paid in the ITR

You can refer this blog too for easy understanding 

https://life.futuregenerali.in/life-insurance-made-simple/savings-investments/income-tax-on-ulip-surrender#:~:text=As%20per%20section%2010%20(10D,death%20benefit%20is%20tax%20free.

1. Since your policy was taken after 01.04.2012 and its premium was more than 10% same will not be eligible for section 80C.

Hence amount received on same will not be fully taxable and will be your investment and therefore you can calculate income on same as capital gain by reducing amount of investment.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Since you have taken policy after 01.04.2012 and the premium was more than 10%, the redemption amount will not be eligible for section 80C.

it will be fully taxable.

Hi

It will fully taxable.

These policy proceeds will be taxable in the hands of the insured in the following situations:

o As per section 10(10D) in case of a life insurance policy issued after 1.4.2003 but on or before 31.3.2012 if the premium payable in any year exceeds 20% of the actual sum assured, then the policy proceeds would be taxable in the hands of the insured. As per section 10(10D) read with explanation to Section 80C(3A), actual sum assured simplymeans the sum assured which is least in all the policy years and does not include any bonus amount which is to be received over and above the assured amount. This 'actual sum assured' shall also not include any premiums which are to be returned to the policyholder.

o For policies issued on or after 1.4.2012, the above mentioned limit of 20% has been changed to 10%.

If the premium paid on the policy is less than 10% of the sum assured during the term of the policy the amount received on maturity are exempt from tax. (For policies purchased before 1st April 2012, the premium must be less than 20% of the sum assured). This exemption is allowed under section 10(10D) of the Income Tax Act. You must report this as exempt income in your income tax return.

If the premium amounts are more than the percentage offered in the plan, the entire money received at maturity has to be added under Income from other sources in the income tax return. This shall be taxable at the slab rate applicable to you.

Dear Sir,

Hope you are doing well !!

For policies which were issued after 1st April 2012, the tax deductions are applicable of the amount of premium paid in a financial year is 10% of the sum assured.

As premium was more than 10%, the same is fully taxable.

No need to pay tax