hi, As per section 194DA of the Income Tax Act, 1961, any sum received by an insured Indian resident from an insurer under a life insurance policy shall be subject to TDS @ 2% if the said sum is not exempted under section 10(10D). This means that policy proceeds exempted under section 10(10D) will be given to the insured without TDS (Tax Deduction at Source). If the policies were bought before April 2012, then to claim benefit under 80C and 10(10d), your insurance cover should be at least 5 times of annual premium. But if your policy is not satisfying these conditions then neither you will get section 80c benefit, nor policy maturity proceeds will be tax free under section 10(10d) Sum received from insurance policy falls under from from other sources, hence it will not come under capital gain. you need to add this income to your other sources of income, to arrive at the tax liability. and taking care of all the deductions. if you have already exhaust all the deduction available under 80c to 80u. then your tax liabilty on amount received will be 185000*30% -1854 =Rs 53646.