Money-Back Insurance Policy with AGEAS FEDERAL
This query is : Resolved
11 March 2025
I have a money-back Insurance policy with AGEAS FEDERAL (formally known as IDBI FEDERAL).
I have paid premiums for 10 years, and now, from this year onwards, I will be getting around Rs. 2,85,000 per annum back for the next 5 years. This year I got Rs. 284705.18 credited in my bank account.
What is the taxability of this receipt?
Kindly advise
I have paid premiums for 10 years, and now, from this year onwards, I will be getting around Rs. 2,85,000 per annum back for the next 5 years. This year I got Rs. 284705.18 credited in my bank account.
What is the taxability of this receipt?
Kindly advise
12 August 2025
Hey! About your money-back insurance policy payouts from AGEAS FEDERAL, here’s how taxability works under Indian Income Tax laws:
Tax Treatment of Money-Back Policy Payouts:
Money-Back Insurance Policy Basics
These policies pay you periodic survival benefits (like your Rs. 2,85,000 annually) during the policy term and a final maturity amount at the end.
Taxability of Survival Benefits (Money-Back Payouts):
Survival benefits received during the policy term are generally exempt from tax under Section 10(10D) of the Income Tax Act if the premium paid in any year does not exceed 10% of the sum assured.
If premiums exceed 10% of sum assured in any year, the survival benefits are taxable as income from other sources.
Since you’ve received the payout, check your policy documents about sum assured and premium amounts to confirm if this condition is met.
Taxability of Final Maturity Amount:
Similar exemption applies to the maturity amount under Section 10(10D) subject to the above premium condition.
If Conditions Not Met:
The money-back amount is treated as income from other sources and taxed as per your slab rate.
The insurer generally doesn’t deduct tax at source on survival benefits, so you may need to declare this income.
What You Should Do:
Check your policy details: Premium paid vs sum assured ratio.
If premiums ≤ 10% of sum assured:
Survival benefits (like your Rs. 2,85,000) are exempt under Section 10(10D). No tax to pay.
If premiums > 10% of sum assured:
Include the survival benefits as income from other sources and pay tax as per your income slab.
Suggestion:
Keep the receipts of these payouts.
Consult your tax advisor with exact policy details if you want a precise determination.
Tax Treatment of Money-Back Policy Payouts:
Money-Back Insurance Policy Basics
These policies pay you periodic survival benefits (like your Rs. 2,85,000 annually) during the policy term and a final maturity amount at the end.
Taxability of Survival Benefits (Money-Back Payouts):
Survival benefits received during the policy term are generally exempt from tax under Section 10(10D) of the Income Tax Act if the premium paid in any year does not exceed 10% of the sum assured.
If premiums exceed 10% of sum assured in any year, the survival benefits are taxable as income from other sources.
Since you’ve received the payout, check your policy documents about sum assured and premium amounts to confirm if this condition is met.
Taxability of Final Maturity Amount:
Similar exemption applies to the maturity amount under Section 10(10D) subject to the above premium condition.
If Conditions Not Met:
The money-back amount is treated as income from other sources and taxed as per your slab rate.
The insurer generally doesn’t deduct tax at source on survival benefits, so you may need to declare this income.
What You Should Do:
Check your policy details: Premium paid vs sum assured ratio.
If premiums ≤ 10% of sum assured:
Survival benefits (like your Rs. 2,85,000) are exempt under Section 10(10D). No tax to pay.
If premiums > 10% of sum assured:
Include the survival benefits as income from other sources and pay tax as per your income slab.
Suggestion:
Keep the receipts of these payouts.
Consult your tax advisor with exact policy details if you want a precise determination.
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