Pension policy maturing

Tax queries 206 views 4 replies

George

Private Employment

25 Points Joined July 2018

Hello Friends,

Am new here so please bear with me.

I had taken a pension plan policy with ICICI Prulife. The policy was taken before the IT law was ammended to include returns of the policy taxable.

The policy I took was the Lifetime Super Pension Plan where in I invested 1 lakh for the first 3 years starting 9 December 2006.

The policy has now matured and I now understand that I have can my returns as pension which will in turn be taxable under the head "Salary".

I also understand that I can get back my money in full making the excess over investment taxable. I invested 3 lakhs and the return is roughly 10 lakhs. Therefore 10-3=7 lakhs is taxable. Now, my questions are:
a) In the second case, if I take my money in full, under what head is the income taxable? Is it Capital Gains? If Yes, can I index my investment and can I re-invest the money in some NHAI or REC bonds for 3 years to avoid income tax?
b) If I take my returns as pension, is there any type of standard deduction I can claim?

Taking a policy is so messed up and such a pain if IT laws are working with retrospective effect. I think I'll just not get into insurance policies anymore :(

Thank you for any help you can provide.

Replies (4)

Dilip Kumar Jana

74 Points Joined September 2017

I think 2/3rd of the maturity amount will be taxable as income from other source. Terms of the policy should be examined. Is there any tds made? Please take opinions from other experts.

George

Private Employment

25 Points Joined July 2018

Hi Dilip thanks for your feedback.

Yes, they told me that they will deduct TDS.

The problem is that I have now checked with 4 Chartered Accountants and none of them have been able to tell me under which head I should be filing this particular income. While 2 told me that they "think" it should go under "Salary", the other 2 said it should be "Other Sources" along with Interest, Dividend, etc. As I see it, it is certainly not interest. Nor can it be strictly classified as dividend against equity. I think that the CAs are also confused in this aspect.

Dilip Kumar Jana

74 Points Joined September 2017

I have received a suggestion that the difference amont of rupees seven lac would be taxable as income from other sources. Pension can be treated as salary only if it is received from employer or ex-employer. In this case it cannot be salary. Now you can maximise deductions u/s 80C, etc. to reduce the tax liability.