03 June 2016
Sir, It is reflected in my 26 AS for Asst. Yr. 2016 - 17 that tds amounting Rs 2667/- (u/s 194DA, @ 2%)has been deducted on maturity amount of my ICICI Pru. Life policy. The maturity value was Rs 133309/- which included the one time premium amount Rs one lac. I am a salaried employee and file IT return in ITR - 1. As the amount is reflected in 26 AS, the whole amount is included in my income and I have to pay tax on the premium amount for which I. Tax was paid in the relevant F.Yr.. Sir, my query is how to avoid paying tax on the premium amount. Please clarify my doubt.
03 June 2016
2% TDS on insurance maturity proceeds is applicable if the proceeds exceed Rs.1 lac. One exception is when the sum insured is minimum 5times the premium paid.
I understand that the sum insured in your case is less than 5 times or Rs.5 lacs in your case, which means there's no way to avoid paying tax on proceeds
04 June 2016
From 1st October 2014, TDS is applicable @2% U/s 194DA on the maturity proceeds of a life insurance policy, if the premium paid is more than 10 per cent of the sum assured. No deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee during the financial year is less than Rs. 1 Lakhs. Currently, under section 10(10D) of the Income Tax Act, any sum received from a life insurer is not taxable if the premium payable is upto 10 % of the sum assured. Tax would be payable as per your tax slab if the premium exceeded 10% of sum assured.So taxability of Maturity of life insurance policy depends upon Sum assured & premium paid.
20 June 2016
Sir, my doubt is not yet clear. While filing my I.T. return, I have to show the entire maturity amount (Rs 133309/-) as my income or less the premium amount paid (133309 - 100000 = 33309/-).
CAclubindia
