• Income tax on unit linked pension plan surrender

Hi I have a unit linked pension plan on which I was paying Rs.1 lac premium annualy for three years during April 2010,2011 and 2012. I surrendered the policy in April 2015 after five years 

However through the three years in which the premium was paid I never claimed the deduction benefit under section 80CCC as I had other investments under section 80C so did not mention the premium for the Pension Plan under 80CCC.

Now when I surrendered the policy in April 2015 I received Rs.4,40,000 

What will be the tax and under which head would I need to pay the same as I am receiving conflicting opionions from CAs

Would each of the premiums be indexed and then LTCG on the gain after indexation which is approach as suggested by some.
Others are suggesting we  would have to pay tax on  the  gain of 1,40,000 (4,40,000-1,40,000) which would be taxable under income from other sources
I have been informed that since no benefit under 80CCC was claimed I do not need to pay tax on the entire surrender value.Is that correct 
Asked 7 years ago in Income Tax

As per our view.You need to pay tax on the gains derived as income from other sources and not under capital gains.

Since you have not claimed deduction thus you need to pay tax on the gains.

Shyam Sunder Modani
CA, Hyderabad
1408 Answers
164 Consultations

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Dear Sir,

Tax is to be payable on the Gain/ Difference. It would also be stated in your policy documents as to how the taxation policy is governed.

Trust this clarifies your query.

Feel free to call back/ get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP.

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

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