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Applicability of Income Tax on the amount received from LIC Money Back Policy
I have taken a Money Back Policy plan of LIC, which return the 25 per cent amount of total insured amount. I have a question whether this amount is taxable or not in respect of Income Tax Act or Rules. Though, the premium paid under the plan is exempted under Section 80 of the act, or Rules. Please guide me.
Replies (2)
When the premium paid on the policy does not exceed 10% of the sum assured for policies issued after 1 April 2012 and 20% of sum assured for policies issued before 1 April 2012– any amount received on maturity of a life insurance policy or amount received as bonus is fully exempt from Income Tax under Section 10(10D). Also covered here are policies taken after 1 April 2013, on the life of a person with a disability or a disease specified under Sections 80U and 80DDB respectively, where the amount received on maturity is tax-free provided the premium paid does not exceed 15% of the sum assured.
In simple terms... check your annual premium paid w.r.t the sum assured. If the ratio is below 10%, its tax exempt u/s. 10(10D) of the act.
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