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Key Man Insurance

This query is : Resolved 
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(Querist)
23 January 2008 Dear Sir
Our company has purchased Key man insurance policy (unit link plan) of their directors.

Policy Details
First Premium: Rs 500000/-
renewal premium is Rs 60000/-

Life Insurance Cover is Rs 500000/-

Due to financial problems company wants to assign this policy on individual name

Please let us know the tax implications for the same
to the company
to the directors as individual

And what are the tax implications for the company if company surrender these policies.


Kindly advice for the same
awaiting for your reply

regards
for
Krishna Terine pvt Ltd
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Anurodh Somani

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Anurodh Somani (Querist)
23 January 2008 1
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Anurodh Somani

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Anurodh Somani (Querist)
23 January 2008 Dear Sir
Our company has purchased Key man insurance policy (unit link plan) of their directors.

Policy Details
First Premium: Rs 500000/-
renewal premium is Rs 60000/-

Life Insurance Cover is Rs 500000/-

Due to financial problems company wants to assign this policy on individual name

Please let us know the tax implications for the same
to the company
to the directors as individual

And what are the tax implications for the company if company surrender these policies.


Kindly advice for the same
awaiting for your reply

regards
for
Krishna Terine pvt Ltd
Profile Image

Anurodh Somani

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Anurodh Somani (Querist)
24 January 2008 1
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
05 April 2012 Section 28 provides that any sum received under a Keyman Insurance policy shall be taxable in the hands of the recipient.

Further, Section 10(10D) provides that such sum shall NOT be exempt.

Accordingly, if the company surrenders the policy then the amount shall be taxable in the hands of the company as business income and shall NOT be exempt.
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