Taxability amount in case of insurance policy maturity

CA Shailesh Urdhwareshe (Sr. Partner) (95 Points)

28 July 2016  

My client had purchased a Life Insurance Policy in the August 2010 wherein he paid a lump sum premium of Rs. 354,000/- for a policy of Rs. 360,000/-(Sum Assured). This policy got matured in the financial year 2015-16 and the assessee received a sum of Rs. 484,000/- as maturity amount. As per recent provisions, Insurance company has deducted I Tax @ 2% on the total maturity.

Main querry is that while working out the taxable income ,what component is taxable ? is it the full amount received as maturity or it is the maturity amount less the premium already paid? what are the references ?