Exemption for maturity amount of life insurance policy

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This discussion clarifies whether the maturity amount from a life insurance policy qualifies for tax exemption under Section 10(10D) of the Income Tax Act. While policy proceeds like sum assured plus bonus are generally tax-free, specific conditions must be met. The user seeks confirmation on whether their policy details fulfil these requirements for exemption or if tax is payable at normal or concessional rates.

Seetharaman DHARMAPURI VENKATA

Seetharaman DHARMAPURI VENKATA (Querist)

17 September 2020 Whether the maturity amount received for a life insurance policy (policy term 7 years; sum assured Rs.2.5 lakhs; premium paid Rs.4.2 lakhs @ Rs.60000/- p.a.; maturity amount Rs.4.36 lakhs)qualifies for exemption under Sec. 10(d) of IT Act? If NOT, what is the tax payable on the maturity amount, whether any concessional rate or at normal rate? Pl clarify. Thanks.

D V SEETHARAMAN

Eswar Reddy S

Eswar Reddy S (Expert)

17 September 2020 Section 10(10)D of the Income Tax Act, 1961 As per Section 10(10D) of the Income Tax Act, 1961 the amount of sum assured plus any bonus (i.e. the policy proceeds) paid on maturity or surrender of policy or on death of the insured are completely tax free for the receiver ..

Seetharaman DHARMAPURI VENKATA

Seetharaman DHARMAPURI VENKATA (Querist)

18 September 2020 Thanks. I learn that certain conditions need to be fulfilled for getting exemption under Sec 10(d). Whether the facts mentioned in my mail above fulfill the conditions required for exemption or not is the query. Pl clarify on this. Thanks.

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