My client is getting survival benefit from LIC of 2.5 lakhs & 2.5 lakhs each on 2 policies which has sum assurred of Rs. 50 lakhs each (total 1 crore).
and Premium paid is ₹525840 each (total ₹1051680)
considering the case does survival benefit will be taxable or exempt under sectio 10(10D)
kindly reply at earliest
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Is Survival Benefit from LIC taxable?
Replies (2)
Quick Summary
Not exempt u/s. 10(10D), if policies purchased after 2012.
Check whether any TDS has been deducted.
Usually exempt, but check the conditions:
• Sec 10(10D) exempts sums received under a life insurance policy (including survival benefits and bonus), if the premium in any year doesn't exceed 10% of the actual sum assured (for policies issued on or after 1 April 2012; 20% for 2003–2012).
• For policies issued on or after 1 April 2023 (non-ULIP), if the aggregate premium across such policies exceeds Rs 5 lakh in any year, receipts (other than on death) are taxable as Other Sources (Sec 56(2)(xiii)), net of premiums paid (not claimed earlier).
• Two policies of Rs 50 lakh sum assured each: if the annual premium per policy is Rs 5 lakh or less (10% condition) and they were issued before 1 April 2023, survival benefits are fully exempt.
• TDS under 194DA (2% on the income component, from 2024) applies only if the receipt is taxable. LIC won't deduct if exempt (with the policy status).
• Report exempt receipts in Schedule EI.
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