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Sec 80 c investment withdrawal

Tax queries 343 views 1 replies

One of my client invested Rs. 4.00 lakhs in unit linked insurance plans which is eligible for deduction U/s 80 C of the Income-tax Act. Over and above this, his other investments in 80 C was Rs.1.00 lakh and claimed deduction U/s 80C for Rs.1.00 lakh.  by virtue of the excess investment,he could not claim the benefit U/s 80 C. The above said unit link insurance plan was surrendered within 5 years (this being the minimum period of holding/contribution for unit linked insurance plans) and the amount was received during the Fin. year 2013-14.  Anybody, kindly clarify me, whether this withdrawal is taxable as income for the Asst. year 2014-15? If so, under what provisions of the Act ?. Kindly provide any write up or case laws on this issue.

CA S. Mahadeven

Replies (1)

Your client has already suffered income tax due to non-claim u/s 80-C, when he could not claim deduction u/s 80-C, since he had claimed other tax-saving investments (other than ULIP).

Therefore, it is obvious that the withdrawal amount from ULIP is not an income, but only a capital receipt, just like a FD maturing. Hemce no tax


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