IF A TAX PAYER WITHDRAW ITS LIC AMOUNT BEFORE THE MATURITY PERIOD (SAY IN 3RD YEAR) THEN WHOLE DEDUCTION CLAIMED IN FIRST 2 YRS WILL BE TAXABLE .
SO MY QUESTION IS UNDER WHICH HEAD I SHOULD SHOW IT AS TAXABLE INCOME IN 3RD YEAR??
THANX IN ADVANCE
PRANITA
Dear Pranitha,
It should be taxed underf IFOS
I thk it will not fall under any specific head so it wil go under IFOS..
THANX MR.ANKIT AND MR.NARAYAN
SO SHOULD I SHOW IT IN IFOS AND SAY AS LIC TAXABLE??
Hi Pranita,
I do not think that proceeds from Insurance policy before its maturity is taxable. Section 10(10D) provides that only three class of proceeds are taxable viz., those referred in 80DD, amount received under keyman insurance policy and policy in respect of which premium payable is more than 20% of the capital assured. Since the proceeds referred by you do not fall within these three categories, it is exempt from tax.
I want to ask
Whether in this case only the amount which have been claimed as deduction will be taxable
OR
the amount which have been received including bonus will be taxable.
Thnx Mr. Dharamaraju,
but i want to ask thn the amount of deduction claimed will be not taxable or wht?
in my client case min period is 5yr but he has withdrawn in 4th yr...
so in my view the amount on which deduction is claimed should be taxable...
Hi,
I do not know why you think that the withdrawal is taxable if drawn in the 4th year?
AS PER INCOME TAX PROVISIONS,
FOR CLAIMING DEDUCTION UNDER SECTION 80C, THE LIC POLICY SHOULD NOT BE SURRENDERED WITHIN 2 YEARS .
IF THE POLICY IS CLOSED ON THE 3RD YEAR, TAXATION DOES NOT ARISE ..
IF CLOSED WITHIN 2 YEARS, PREVIOUS DEDUCTIONS BECOMES TAXABLE UNDER INCOME FROM OTHER SOURCES.
I
CAclubindia
