Tds on insurance maturity proceedings
A K SARMA (SERVICE IN PSU (OIL & GAS)) (166 Points)
08 May 2017A K SARMA (SERVICE IN PSU (OIL & GAS)) (166 Points)
08 May 2017
CA Rashmi Gandhi
(Chartered Accountant)
(86243 Points)
Replied 08 May 2017
Sujit Talukder
(service)
(719 Points)
Replied 08 May 2017
Exemption u/s 10(10D) comes with rider. All the maturity proceeds of insurance policies are not exempt. In case of policies bought before April 2012, if the premium is more than 20% of the sum insured, then the entire maturity proceeds are taxable. The limit of 20% is reduced to 10% in case of policies bought on or after 01.04.2012.
In your case, the polcy was bought in March 2012 so the limit of premium is 20% of the sum assured. If the premium you are paying is 20% or less of the sum assured/death benefit then you can enjoy the benefit of section 10(10D). Otherwise the entire receipt is taxable and not the excess of receipts over premium paid. Since the insurer had deducted TDS it proves that the premium was more than 20% of the sum assured on your policy.You have not mentioned the SA of your policy. Nevertheless, the entire receipt is taxable. Since the TDS is made at 1% and inclusion of the same Rs. 1,32,517.68/- in your income will increase your tax liability substantially which you have to pay.
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