mr.A has life insurance policy of Rs.500000 he paid premium of Rs.400000 , on maturity he received 475000 and the insurance company dedicated TDS u/s 194DA, now what is the taxable income for Mr.A
While filling your income tax return you should report net maturity proceeds under income from other source that is 500000-400000 it comes to 100000 rs income. And you should claim the tds credit of rs 25000 against tax liability determined while filling his income tax return.
If we show only net maturity proceeds of Rs.10000 , then return will be default on the basis of showing lower income , total income showed in return will compare with gross amount in TDS ( gross amount is 500000 as per TDS we show only 10000) this problem will compulsory come
There is a circular issued by CBDT No.7/2003 Dated 05-09-2003, the extract of which says “the income accruing on such policies (not including the premium paid by the assessee) shall become taxable.”
[Here ‘Such policies’ mean policies not exempt from tax]
SO as per this circular 100000 will be chargeable.
Again a matter come before us, MISMATCH between Form 26 AS & Return filed.
But as regarding what is taxable amount under section 194DA, it will be GROSS AMOUNT RECEIVED DURING A FINANCIAL YEAR FROM LIFE INSURANCE COMPANY NOT EXEMPT UNDER SECTION 10(10D).
Incase an assessee receives LIC maturity which is not exempt u/s 10(10D), than [ Maturity Amount less all Premium paid ] by you is taxable as income from other sources. and you can claim TDS which is deducted, in your IT return.
Total/Gross amount is not taxable, only Income portion is taxable.
In your case, Only 1,00,000 is taxable and you can claim 25,000 TDS which deducted, in your IT return
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