Tax liability on surrendered value of lic
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 February 2012
dear sir,
i had a icici lifetime pention - II policy which i have surrendered on 19/04/2011.
Now i want to know the tax liability against surrendered value, premium paid to avail income tax benefits under section 80ccc(1)
i paid first yearly premium of this policy on 27/02/2005
thank you
i had a icici lifetime pention - II policy which i have surrendered on 19/04/2011.
Now i want to know the tax liability against surrendered value, premium paid to avail income tax benefits under section 80ccc(1)
i paid first yearly premium of this policy on 27/02/2005
thank you
03 February 2012
Since you have surrendered the policy after 6 years of purchase, there is no tax liability on you for whatever gains you have received from the surrender value.
26 July 2025
Here's a clear explanation regarding the **tax liability on the surrendered value of your LIC policy**:
---
## Situation:
* You had an **ICICI LifeTime Pension-II policy**.
* You **surrendered it on 19/04/2011**.
* You paid your **first yearly premium on 27/02/2005**.
* You claimed **tax benefits under Section 80CCC(1)** on the premiums paid.
---
## Tax Treatment of Surrender Value:
### 1. **Tax on surrender value:**
* Since the policy was **held for more than 5 years** (from Feb 2005 to April 2011 is more than 6 years),
* As per **Section 10(10D)** of the Income Tax Act, the **surrender proceeds are exempt from tax**, provided the premium paid in any year does not exceed 10% of the sum assured.
**In simple terms:**
> Your **surrender value is tax-free** as you have held the policy for more than 5 years.
---
### 2. **Premium paid and Section 80CCC(1):**
* Premiums paid towards a pension policy (like LifeTime Pension) qualify for deduction under **Section 80CCC(1)** subject to the overall limit of ₹1.5 lakh under Section 80C/80CCC/80CCD.
* Since you claimed deduction earlier, no reversal or additional tax is applicable on surrender.
---
## Summary:
| Aspect | Tax Implication |
| -------------------------------- | -------------------------------------------- |
| Holding period > 5 years | **Surrender value exempt** under Sec 10(10D) |
| Premiums claimed under Sec 80CCC | Deduction allowed, no tax reversal |
| Surrender before 5 years | Taxable as income (not your case) |
---
If you have any more doubts or want help calculating exact figures, feel free to ask!
---
## Situation:
* You had an **ICICI LifeTime Pension-II policy**.
* You **surrendered it on 19/04/2011**.
* You paid your **first yearly premium on 27/02/2005**.
* You claimed **tax benefits under Section 80CCC(1)** on the premiums paid.
---
## Tax Treatment of Surrender Value:
### 1. **Tax on surrender value:**
* Since the policy was **held for more than 5 years** (from Feb 2005 to April 2011 is more than 6 years),
* As per **Section 10(10D)** of the Income Tax Act, the **surrender proceeds are exempt from tax**, provided the premium paid in any year does not exceed 10% of the sum assured.
**In simple terms:**
> Your **surrender value is tax-free** as you have held the policy for more than 5 years.
---
### 2. **Premium paid and Section 80CCC(1):**
* Premiums paid towards a pension policy (like LifeTime Pension) qualify for deduction under **Section 80CCC(1)** subject to the overall limit of ₹1.5 lakh under Section 80C/80CCC/80CCD.
* Since you claimed deduction earlier, no reversal or additional tax is applicable on surrender.
---
## Summary:
| Aspect | Tax Implication |
| -------------------------------- | -------------------------------------------- |
| Holding period > 5 years | **Surrender value exempt** under Sec 10(10D) |
| Premiums claimed under Sec 80CCC | Deduction allowed, no tax reversal |
| Surrender before 5 years | Taxable as income (not your case) |
---
If you have any more doubts or want help calculating exact figures, feel free to ask!
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