Lic maturity payment TDS

No TDS if the maturity amount be taxfree u/s. 10(10D) IT act.

Adding the reason behind the reply above: a policy taken in February 2001 is fully exempt under Section 10(10D), so no TDS applies on its maturity in February 2026.

1. Exemption: Section 10(10D) of the Income-tax Act, 1961 exempts sums received under a life insurance policy, including bonus. The premium-to-sum-assured conditions apply only to policies issued on or after 1 April 2003 (20 percent limit up to 31 March 2012, 10 percent thereafter). A policy issued in 2001 is outside these conditions, so the full maturity amount with bonus is exempt.

2. Later restrictions do not apply: the aggregate annual premium limit (Rs 5 lakh) for non-ULIP policies applies only to policies issued on or after 1 April 2023.

3. TDS: Section 194DA requires TDS only on the income portion of a payment that is not exempt under Section 10(10D). The rate is 2 percent from 1 October 2024 (earlier 5 percent). Since this maturity is exempt, LIC should not deduct TDS. If it has been deducted (check Form 26AS/AIS), claim the credit and refund in the ITR.

4. Reporting: show the maturity amount as exempt income in Schedule EI of the ITR for AY 2026-27 (FY 2025-26) under Section 10(10D), and keep the policy document and LIC maturity statement on record.

Overall Summary: Maturity proceeds of a policy issued in 2001 are fully exempt under Section 10(10D) without any premium-ratio test, so Section 194DA TDS does not apply. Report it as exempt income and claim a refund if any TDS was wrongly deducted.

For a policy taken in February 2001, the maturity proceeds are generally exempt under section 10(10D), subject to the policy satisfying the conditions applicable to policies issued before 1 April 2003. The later premium-based restrictions introduced for policies issued on or after that date do not apply. Accordingly, section 194DA TDS should not apply to the maturity payment, assuming this is a qualifying life-insurance policy and the proceeds are not otherwise excluded from exemption (for example, under the specified key-person policy rules).

A 2026 payment date does not by itself change the result; confirm the policy is not a key-person policy and that the payment is genuinely maturity proceeds. This maturity-payment review can be incorporated into your insurance and tax compliance workflow. Manual checking of policy dates, exclusions and TDS treatment is difficult, while automation reduces repetitive work and leaves the final judgment with the professional. At Jir AI we provide 2,000+ AI agents and 650+ integrations to streamline your practice’s day-to-day workload. Message us on WhatsApp to explore how it fits your workflow: https://wa.me/message/3HVOZ7HIY4ESC1