Pension plan surrender before maturity

Pension plan surrender before maturity

Hello

i would like to surrender my ICICI PruLifeTime Pension policy. This policy I started this policy in the year 2002 and paying annual premium of Rs. 10000/-. Most of these 14 years i have claimed exemption in section 80C / 80CCC. Upon its surrender I have received Rs. 3,57,000 in Oct, 2017.

My questions are

1. is the surrender value taxable ? if so under what head.
2. since I have claimed exemption is there any additional tax liability at the time of surrender?
3. how much tax i may have to pay for amount received?

Asked 6 years ago in Income Tax

1. Yes, other sources.

2. The total surrender value shall be taxable.

3. The amount of tax shall depend on which slab your income falls into.

Lakshita Bhandari

CA, Mumbai

5687 Answers

910 Consultations

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Talk to Lakshita Bhandari

Hello,

1. In most of the cases Pension plan are taxable. You still read your policy documents for more clarity.

2. No additional liability but your claim amount will be subject to tax.

3. Depends in which tax slab do you fall

Trust this clarifies your query.

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

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Rohit R Sharma

CA, Mumbai

2104 Answers

95 Consultations

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Talk to Rohit R Sharma

1. Surrender value is taxable under he head other sources.

2. Will check and get back

3. It will be based on your slab.

Please feel free to call revert in case you need more clarity

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar

CA, Mumbai

3576 Answers

183 Consultations

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Talk to Abhishek Dugar

Hi,

1. Please refer to your policy document to understand the taxation aspect. Most pension policies are taxable on surrender, but it is advisable to check the policy document.

2. There will not be any additional tax liability solely because you claimed exemption earlier.

3. The amount is taxable as per the slab rates.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Keerthiga Padmanabhan

CA, Greater Mumbai

784 Answers

27 Consultations

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Talk to Keerthiga Padmanabhan

Thanks for responsese. Appreciated. Earlier i was just worried about pension policy surrender and its implications hence was concentrating on that perspective only. your responses created few more doubts in my mind.

I have total 3 policies from ICICI Prulife, 2 ULIP and one pension policy since 2002. On these three policies took a Overdraft (loan against securities) of 12 Lakhs in 2014. Bank created a current account with Overdraft facility to enable me to draw amount when i need.

To repay this OD, i have surrendered all the three policies and the surrender value was adjusted towards the OD. Post OD adjustment now there is a credit balance of 8 lakhs is available in this current account.

Now the questions are
a. what is my tax liability? is it on overall credit balance or only difference of surrender value minus loan taken on pension plan?
b. ULIP policy premium's was paid for more than 5 years. so will it attract tax ?

outside this insurance policy related queries, one more query is

I received a notice U/S 143(1) stating that that there is a short payment of tax liability for the AY 2016-17. Reason is while filing my returns i forgot to mention TDS deductions from my previous company in the ITR. Till when I can make the correction and can you guide me with procedure to correct ITR.

regards
nagaraj

Asked 6 years ago

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