Please let us know on the issue of Keyman Insurance Policy, if: -
Total term of the Keyman Insurance policy is 10 years. It is assigned in the favor of the Keyman after payment of the premium by the company for the 7 years. It is clear that at the time of assignment, the surrender value would be taxable as perquisite in the hands of the Keyman. The Maturity Proceeds of the Policy would be received after the completion of the total term of 10 years of the policy. In the remaining 3 years the premium of the policy would be paid by the Keyman himself.
As per the general view the maturity proceeds of the policy would be exempt as the premium is paid by the Keyman after the assignment of the policy.
So could you please provide us with any case Law of the ITAT, High Court, and Supreme Court supporting the view that the Maturity Proceeds of the Keyman Insurance Policy are exempt.
10 October 2011
ANY SUM RECD ON MATURITY OF KIP IS NOT EXEMPT UNDER SECTUION 10(10D) SEE SECTION 10(10D)(b)FURTHER ANY SUM RECD UNDER A KIP IS TAXABLE AS PROFITS IN LIUE OF SALARY UNDER SECTION 17(3)(ii)
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