About TDS & Income Tax

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This discussion clarifies the tax treatment of LIC policy maturity proceeds for NRIs. Policies issued before 2002 are generally tax-free under Section 10(10D) of the Income Tax Act, meaning no TDS should be deducted by LIC or the bank. However, a question arises regarding the taxability if the maturity amount is transferred to an NRO account.

Patel

Patel (Querist)
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18 July 2026 Dear sir,
when A person take LIC Jivan Kishor policy of 250000/- and premium 6395/- at his age 1 year in 1993 and will mature in year 2027, now a person is recently NRI and no any other income in India. At time of maturity around Rs.750000/- of this policy will transfer to NRO a/c in 2027 by LIC, So tell me can this amount came under TDS or Income Tax? , LIC or Bank can deduct TDS of mature amount at time of maturity ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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18 July 2026 The maturity amount for an LIC policy purchased before 2002 is completely tax-free.
Under Section 10(10D) of the Income Tax Act, 1961 (and under its equivalent provisions under the Income Tax Act, 2025), any sum received from a life insurance policy—including maturity proceeds, survival benefits, and accumulated bonuses—is exempt from income tax. As such there should not be any tax deduction.

Patel

Patel (Querist)
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18 July 2026 Thank you so much. But it won't work if it's deposited into NRO account, right?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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18 July 2026 It is not based on residency of the insurer. So, even if the maturity proceeds are deposited to NRO account, the amount would be tax free.

Patel

Patel (Querist)
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18 July 2026 Heartfully thanks Sir

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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19 July 2026 You are welcome,

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