Accounting Treatment of LIC payments

Page no : 2

Deepak (Others) (43 Points)
Replied 27 December 2015

why life insurance is drawing ...not an investment ????

Mohammed Shahid Rahman (Partner) (143 Points)
Replied 16 February 2016

I cannot find Accrued Bonus entry in tally ERP9? How do I create one?

One of my policy max life insurance was discontinued as i did not pay any amount after first two or three year. After completion of 5 years I recd back some of the amount. How do I treat this in tally?

I am using Income and Expenditure instead of P&L as I am creating personal accounts for my wife. She is a housewife. Please help.

Mohammed Shahid Rahman (Partner) (143 Points)
Replied 29 February 2016

How to create a ledger for accrued bonus. I am maintaining a personal account. I have received Sum assured + Vested Bonus + Interest.

I have done entry as following:

Dr Bank A/c - The amount recd Rs.xxx/-

Cr - LIC Policy Rs.xxx/-

I have just crossed the border line for Income Tax paying as I know I have done the wrong entry. I know that maturity amount recd is tax free but I do not know how to do that entry in Tally.

I am totally new in accountancy and tally. Please help me.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 29 February 2016

Originally posted by : Deepak
	why life insurance is drawing ...not an investment ????

LIC does not allocate you investment units, but give you assurance for monetory safety,

premium paid is insurance premium and for that reason its available for deduction u/s 80C, ( Chapter VIA) of Income Tax

on return the gross amount received is exempt from tax and to be treated as capital receipt, without any tax ( there are few exeptions also, like pension plans, keyman insurance etc)

Ravi Ranjan Singh (Asst Manger of Accounts) (21 Points)
Replied 05 August 2016

Thanks a lot sir.

Siddharth Goel (Chartered Accountant) (3026 Points)
Replied 05 July 2018

Originally posted by : Mohammed Shahid Rahman
	How to create a ledger for accrued bonus. I am maintaining a personal account. I have received Sum assured + Vested Bonus + Interest. I have done entry as following: Dr Bank A/c - The amount recd Rs.xxx/- Cr - LIC Policy Rs.xxx/- I have just crossed the border line for Income Tax paying as I know I have done the wrong entry. I know that maturity amount recd is tax free but I do not know how to do that entry in Tally. I am totally new in accountancy and tally. Please help me.

Hi,

The entry would be:

Bank A/c Dr.

To LIC Account

To Vested Bonus (Income from Other Sources)

To Interest (Income from Other Sources)

It is correct that, the policy amount shall not be charged to tax and only Bonus and Interest shall be offerred for tax.

There is no connection between Income Tax Return and treatement of it in Tally.

The income of Bonus and Interest is just to be shown in the ITR and not the principal amount of LIC policy.

Ritesh Roy (2 Points)
Replied 24 April 2019

Maturity claim paid by Lic to bank.what is entry

Ashok (none) (26 Points)
Replied 17 June 2019

Total receipt from life insurance including principal is exempted under section 10 (10D) subject to that premium paid yearly is not above 10% of assured amount.