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Lic premature surrender policy proceeds - taxation

Tax queries 448 views 2 replies

Hi,

I had taken a Jeevan Anand Policy in 2013. I had paid the annual premiums for 5 years and subsequently had surrendered the policy in November 2018. At the time of surrender, the surrender value was paid to me which was 40% less than the premiums I had paid. 

I have the following queries:

1. Will this surrender negate the tax benefits I have already claimed?

2. Is the redemption proceeds on this premature surrender taxable? If yes, is it taxed as per the routine income tax slab?

Thank you in advance for the help

 

Replies (2)
1. As u have completed 5 policy year, you not need to reverse the tax benefits that you have claimed. 2. Surrender proceed is taxable however claim amount over premium paid is only taxable as in your case it is negative so no tax. However same time tds us 194 DA tds can be deducted by insurer if total proceed exceeds rs 1 lakh which will be claimed by you as refund.

Thank you for the reply

 


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