hi, I started a policy in 2012 with a premium od 102000 per year for six years. suk assured was Rs 600000 The Policy got matured in 2018 and ai received Rs 725000 as maturity payment. Now do I have to pay tax on this whole amount which seems little odd to me. or on the profit amount which comes out at Rs 1lakh accounting near 6 lakhs I paid as premium.
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Quick Summary
This discussion clarifies the tax implications of LIC maturity proceeds. If your policy was issued before April 1, 2012, and your annual premium was less than 20% of the sum assured, your maturity amount is typically tax-exempt. For policies issued after this date, the threshold is 10%. Importantly, tax is only applicable on the net gain (profit), not the entire maturity amount received.
If the policy is issued before 1.4.12, the maturity proceeds is exempt if the annual premium is less than 20% of the sum assured. post 1.4.12 it is reduced to 10%. If your policy is issued before 1.4.12, the income is exempt from tax, since the annual premium is less than 20%.