TDS on maturity payment of LIC of india

LIC of India does not deduct TDS on maturity payments of policies taken before April 1, 2016, if the premium paid doesnot exceed Rs.1.5 lakh in a financial year and certain other conditions are met. 

Can you please state the 'other conditions'

That you have mentioned 

If the premium payment in any year does not exceed 20% of the sum assured, there will not be any TDS deduction.

SEC 10(10) D EXEMPTION IS THERE.

Disclose sum assured and other details to ascertain correct figure

Disclose sum assured and other details to ascertain correct figure

1. Section 10(10D) Exemption Criteria:

For policies issued before 1st April 2012 (your policy falls in this category), the maturity amount is EXEMPT from tax if the premium paid in any year does not exceed 20% of the sum assured.

2. TDS Applicability:

- If the above condition is met (premium ≤ 20% of sum assured), No TDS will be deducted by LIC and the maturity amount is fully tax-exempt.

- If the condition is not met (premium > 20% of sum assured), then Section 194DA applies and TDS @ 2% will be deducted, provided the total payout exceeds ₹1 lakh.

The 1.5 lakh limit is relevant only for certain ULIPs issued after 1st February 2021. For your policy (Feb 2000), only the 20% premium-to-sum-assured ratio matters.

Recommendation:

Please check if your annual premium paid was within 20% of the sum assured. If yes, no TDS will be deducted and the maturity is tax-free. If not, LIC will deduct 2% TDS on the income portion.

TDS on LIC maturity proceeds is governed by Section 194DA, deducted at 2% on the income portion only, which means maturity amount minus total premiums paid. If the policy qualifies for exemption under Section 10(10D), meaning the sum assured is at least 10 times the annual premium for policies issued after April 1, 2012, then no TDS applies and the full maturity is tax-free in your hands. Policies that do not meet the 10x test are taxable and 194DA TDS will be deducted by LIC before paying you. You can claim credit for the TDS in your ITR and recalculate the actual tax on the income. For a guide on which TDS section applies to different payment categories, this [TDS section reference guide]covers the key sections for FY 2026-27.

For a life-insurance policy taken in February 2000 and maturing in February 2026, LIC should not deduct TDS under section 194DA if the policy proceeds are exempt under section 10(10D). A policy issued before 1 April 2003 is generally exempt, subject to the statutory exclusions (for example, a keyman policy or certain policies assigned to another person).

If the proceeds are taxable, section 194DA generally requires TDS at 5% on the income component—the amount paid less premiums not included in that income—when the payment or aggregate payments in the financial year reach ₹1 lakh. Confirm the policy type, any assignment, and whether it falls within an exclusion before relying on the exemption.

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