exemption for matuared life insurance policy

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exemption for matuared life insurance policy

matuard insurance policy(10 years term) amount to be mentioned in itreturn? policy matuaring in feb.2017 .i give pan number to insurance company which telling 1% deduction? if pan number not given 20% deduction?.

Profile photo of basavaraja k Asked By: basavaraja 2 replies 2 helpful answers Last Updated: 3 weeks, 6 days ago
  • Profile photo of basavaraja kbasavaraja
    Participant

    matuard insurance policy(10 years term) amount to be mentioned in itreturn? policy matuaring in feb.2017 .i give pan number to insurance company which telling 1% deduction? if pan number not given 20% deduction?.

  • Profile photo of Chetan ChandakChetan Chandak
    Moderator

    From 1st October 2014, the insurance companies are required to deduct tax at source of 2 per cent from maturity proceeds of a life insurance policy if the premium paid is more than 10 per cent of the sum assured or if the amount does not qualify for exemption under section 10(10D).

    Currently, under section 10(10D) of the Income Tax Act, any sum received from a life insurer is not taxable if the premium payable is upto 10 % of the sum assured. Tax would be payable as per your tax slab if the premium exceeded the 10 per cent amount.
    However, since there was not TDS, in earlier years several assesses avoided the tax, so to bring control on this tax evasion new TDS provision was inserted.
    You should consult your tax advisor with your policy details to decide exact taxability and reporting requirement.
    I would suggest furnishing your PAN else taxes will be deducted at 20%.

  • Profile photo of Nitesh BindNitesh Bind
    Participant

    Starting October 2014, if the amount received from a life insurance policy is more than Rs 1,00,000, TDS @ 1% shall be deducted by the insurer before making this payment. TDS will also be deducted on bonus payments. If the amount received is less than Rs 1,00,000 no TDS shall be deducted but the amount received shall be fully taxable for you. You can claim credit for the TDS deducted in your Income Tax Return. Remember, such TDS can be made only on policies not covered under an exemption under Section 10(10D). And Yes if PAN not furnished then TDS would be deducted @20% under section 206AA.

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