Hi,
My friend is planning to buy 2 life insurance policies for 2.5 Lakh annual premium. If the annual premium is paid in one shot, the total premium of both policies put together per year is 5 Lakhs - so the sum assured on maturity will not come under taxation.
However, if he chooses monthly premium payment, overall amount of premium paid crosses the 5 Lakh per year limit (i.e. some of monthly payment of both policies across 12 months). Will one policy sum assured come under taxation on maturity?
Please note, annualised premium as per both policy is 2.5 Lakh each and together it is 5 Lakh only.
However, if we include the extra charges paid per month due to monthly payment option, annual premium works out more than 5 Lakh for both policies together.
Will Income Tax consider annualised premium amout or the sum of monthly payments to arrive at taxability?
Regards
Sri
CAclubindia
