TAXABILITY OF INCOME

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2011 WHETHER AMT RECD FROM LIC SUPER ANNUATION , PF PENSION, DIVIDEND FRON BIRLA TAX RELIEF'96, icici TAX PLAN DIVIDEND IS EXEMPT OR TAXABLE ?

THE INCOME RECD FROM REDEMPTION OF LIC ULIP PLAN OR ANY OTHER PLAN IS TAXABLE UNDER CAPITAL GAINS.WHETHER CORRECT?

CA Navin Jain

CA Navin Jain (Expert)
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02 May 2011 i think all amount is exempt form tax

Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2011 wht abt the taxability of units of LIC which is redeemed ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Here's a clear summary for your query on taxability of amounts from LIC superannuation, PF pension, dividends from tax-saving plans, and redemption of LIC ULIP units:

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### 1. **Amount received from LIC Superannuation & PF Pension**

* **Superannuation (Lump sum):** Generally, **exempt from tax** if received as a lump sum on retirement or termination under the scheme and subject to conditions under **Section 10(13)** or **Section 10(10AA)**.
* **PF Pension:** Amount received as pension from recognized PF schemes is generally **taxable as salary or pension income**. However, **withdrawals** from PF (like from EPF) are exempt if conditions under **Section 10(12)** are met (like 5 years continuous service).

### 2. **Dividend from Birla Tax Relief '96, ICICI Tax Plan Dividend**

* **Dividends from Mutual Funds or LIC Tax-saving Plans** are **exempt from tax in the hands of the investor** under **Section 10(34)** (subject to Dividend Distribution Tax paid by company/fund).
* However, since Finance Act 2020, dividends are taxable in hands of shareholders as per applicable slab rates (so the above exemption may not apply now; confirm the latest law).

### 3. **Redemption of LIC ULIP Plan or any other plan**

* Redemption proceeds of ULIP units may be subject to **capital gains tax**.
* If the premium paid does not exceed Rs. 2.5 lakhs per annum, then proceeds are exempt under **Section 10(10D)**.
* If conditions are not met, gains are taxable as **capital gains** (short or long term depending on holding period).

### 4. **Taxability of units of LIC redeemed**

* Redemption of LIC mutual fund units is subject to **capital gains tax**:

* **Short-term capital gains (STCG):** if units held ≤ 36 months (equity funds: 12 months).
* **Long-term capital gains (LTCG):** if units held > 36 months (equity funds: 12 months). LTCG on equity above Rs. 1 lakh is taxable at 10%.

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**Summary Table:**

| Income Source | Tax Treatment |
| ----------------------------------- | -------------------------------------------------------------------- |
| LIC Superannuation lump sum | Exempt under Sec 10(10AA) |
| PF Pension Amount | Taxable as salary/pension |
| Dividends from tax saving plans | Earlier exempt (Sec 10(34)); Now taxable per slab |
| Redemption of LIC ULIP units | Exempt if premium ≤ Rs 2.5L (Sec 10(10D); else taxable capital gains |
| Redemption of LIC mutual fund units | Capital gains (STCG or LTCG) |

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