Receipt From LIC

This query is : Resolved

CA ARVIND TIWARI (Querist)
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15 December 2008 Whether receipt from LIC on death of the insured person by the nominee of the insured is Capital receipt or Revenue receipt for under IT, Act ?

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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15 December 2008 It is a capital receipt which is exempt from income tax

Ravikumar.G

Ravikumar.G (Expert)
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15 December 2008 Not taxable in the hands of nominee.

Ravikumar.G

Ravikumar.G (Expert)
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15 December 2008 ONE of the basic principles to decide the taxability of a receipt under the Income-tax Act, 1961 is to distinguish between capital and revenue receipts. The distinction between the two is vital because capital receipts are exempt from tax unless specifically taxable — capital gains, for instance.

Conversely, revenue receipts are taxable unless expressly exempt in accordance with the provisions of law. The Act does not define `capital receipt' and `revenue receipt', but then one has to depend on the natural meaning of the concepts and also draw support from various case laws on the subject.