Taxability on the event of Life/Term insurance maturity

5 Nov 2022

Taxability on the event of Life/Term insurance maturity


Sec 10(10D) of the act defines that if any sum(surrender value/maturity value) is received on the maturity of life insurance then it is exempt provided if the life insurance premium is according to rules of Sec 80 C.

 

TDS Provision 

 

  • If policy is issued in October 2014 or after and the receiving amount is not covered under section 10(10D) and the amount is more than Rs 1,00,000 then TDS rate will be 1% .

 

  • But if policy is issued after September 2019 or after & receiving amount through life insurance policy is not covered under section 10(10D) & amount received is more than Rs1,00,000 then TDS rate will be 5%.

  • If you have not registered your PAN no Insurance company then TDS Rate will be 20%.

 

 

Some FAQs 

 

  • What premium is allowed as per Sec 80 C?

 

When premium is paid for LIC then deduction is allowed under this section upto maximum Rs 1,50,000 but with some conditions and they are as follows : 

  • If policy is issued before April 1,2012 & premium should not be more then 20% of sum assured

  • If policy is issued after April 1,2012 & premium should not be more then 10% of sum assured

  • If policy is issued after April 1,2013 and it is specifically for disabled persons then premium should not be more than 15% of sum assured.

 

 

  • What should be the mode of payment of premium for Life Insurance.

It should be any mode(digital) other than cash.


Minal Jain