Section 194d tds done so whole amt to be included in income
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 July 2016
One of my client had invested in a LIC policy so on maturity the whole amount has been received after deducting TDS @ 2% under Section 194 D. Now, the question arises as to whether the whole amount on which TDS has been done has to be included as income or only incremental amount ie bonus amount has to be included as income and return has to be filed. Lets say if he has invested Rs. 150000 in year 1 and on maturity he has received 198548 ie after deducting tds of Rs. 4052 on amount - Rs. 202600. So whole Rs. 202600 has to be included in total income or only Rs. 52600 ie profit earned on that policy. Pls guide.
02 July 2016
when condition of 10(10)d is not satisfied than LIC co deductes tds ..... and when tds deducted on LIC maturity full amount to be taxable.
it's better to check the papers that condition of 10(10)d satisfying or not.
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 July 2016
I have checked the policy document, but the insurance coverage is less, so TDS has been deducted. But my client had invested only 150000 and he has received Rs. 202600. So in including the income from other sources, i need to calculate tax on Rs. 52600 or 202600. As the amount invested was paid from taxable income and on it the client has already paid the taxes, so once again it has to pay tax on full amount? Kindly reply.
23 July 2025
In the situation you’ve described, TDS under Section 194D has been deducted on the maturity amount of the LIC policy, and the key concern is how to account for the maturity amount in the income tax return.
Key Points to Consider:
TDS under Section 194D:
Section 194D applies to payments made by insurance companies (like LIC) to policyholders under certain conditions.
This section typically involves the payment of any sum under a life insurance policy. TDS is deducted on the maturity proceeds if the conditions of Section 10(10D) are not satisfied.
TDS is deducted on the full amount of the maturity proceeds at a rate of 2% if the conditions of Section 10(10D) (which generally exempts maturity benefits) are not fulfilled.
Section 10(10D) Exemption:
Under Section 10(10D), the maturity amount of life insurance policies is exempt from tax if the sum of premiums paid does not exceed 10% of the sum assured.
If the sum assured is higher than the premiums paid and the policy meets the criteria (10% premium limit), the maturity amount is exempt.
However, since TDS has been deducted (indicating that the policy doesn't meet Section 10(10D) conditions), it implies that the amount is taxable.
Taxation of Maturity Amount:
Since the TDS has been deducted on the entire maturity amount, and the conditions for exemption under Section 10(10D) are not met, the entire maturity amount (Rs. 202,600 in your example) will be taxable.
The full maturity amount of Rs. 202,600 must be included in your client’s income for the year.
However, since your client invested Rs. 150,000, the profit (Rs. 52,600) will be taxable as income under "Income from Other Sources".
TDS of Rs. 4,052 has already been deducted on the maturity amount, and this can be claimed as a credit against your client’s tax liability when filing the tax return.
How to Report in the Tax Return:
Full amount received (Rs. 202,600) should be reported as income under Income from Other Sources.
The Rs. 52,600 (profit) is the income portion and should be shown as taxable.
The TDS of Rs. 4,052 deducted by the insurance company should be claimed as a tax credit against the total tax liability while filing the return.
Conclusion:
To summarize:
The entire maturity amount (Rs. 202,600) must be reported in the return as income.
The incremental profit (Rs. 52,600) is taxable.
The TDS of Rs. 4,052 will be claimed as a credit in the return.
You do not need to pay tax on the full amount again since TDS has already been deducted.
Make sure to consult the insurance policy details and verify that the conditions for Section 10(10D) exemption are indeed not met, which will clarify why TDS was deducted.
Key Points to Consider:
TDS under Section 194D:
Section 194D applies to payments made by insurance companies (like LIC) to policyholders under certain conditions.
This section typically involves the payment of any sum under a life insurance policy. TDS is deducted on the maturity proceeds if the conditions of Section 10(10D) are not satisfied.
TDS is deducted on the full amount of the maturity proceeds at a rate of 2% if the conditions of Section 10(10D) (which generally exempts maturity benefits) are not fulfilled.
Section 10(10D) Exemption:
Under Section 10(10D), the maturity amount of life insurance policies is exempt from tax if the sum of premiums paid does not exceed 10% of the sum assured.
If the sum assured is higher than the premiums paid and the policy meets the criteria (10% premium limit), the maturity amount is exempt.
However, since TDS has been deducted (indicating that the policy doesn't meet Section 10(10D) conditions), it implies that the amount is taxable.
Taxation of Maturity Amount:
Since the TDS has been deducted on the entire maturity amount, and the conditions for exemption under Section 10(10D) are not met, the entire maturity amount (Rs. 202,600 in your example) will be taxable.
The full maturity amount of Rs. 202,600 must be included in your client’s income for the year.
However, since your client invested Rs. 150,000, the profit (Rs. 52,600) will be taxable as income under "Income from Other Sources".
TDS of Rs. 4,052 has already been deducted on the maturity amount, and this can be claimed as a credit against your client’s tax liability when filing the tax return.
How to Report in the Tax Return:
Full amount received (Rs. 202,600) should be reported as income under Income from Other Sources.
The Rs. 52,600 (profit) is the income portion and should be shown as taxable.
The TDS of Rs. 4,052 deducted by the insurance company should be claimed as a tax credit against the total tax liability while filing the return.
Conclusion:
To summarize:
The entire maturity amount (Rs. 202,600) must be reported in the return as income.
The incremental profit (Rs. 52,600) is taxable.
The TDS of Rs. 4,052 will be claimed as a credit in the return.
You do not need to pay tax on the full amount again since TDS has already been deducted.
Make sure to consult the insurance policy details and verify that the conditions for Section 10(10D) exemption are indeed not met, which will clarify why TDS was deducted.
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