My experience about this subject is different. Details of my single premium LIC policy was as follows :
Single Prem paid - 97048
Gross maturity proceeds - 111348
Income received = 111348 minus 97048 = 14300
But LIC is adding the two survival benefits received at three year interval during the tenure of the policy amounting to Rs. 19500 each and obviously this survival benefit was not received in the year in which the policy matured. i. e. FY 2022 - 2023.
Thus, the income received by me according to LIC is 14300 + 19500 + 19500 = 53300. Futher, LIC has deducted tax at source (TDS) on this amount and reported 53300 as my income and the same appears now in my AIS. I have submitted revision in AIS.
Kindly advise whether my income should be taken as 14300 or 53300 that LIC has reported to Income Tax Department.
Hi @nayakd1
The amount on which LIC has deducted TDS will be taxable to you (ie 53,000).
Thanks Ms. Shah.
But Survival Benefit was paid in earlier financial years at three year interval and not in the year of maturity. It is not clear to me how it can form part of taxable income.
LIC may deduct Tax at source on whatever amount they adopt; I will get credit for it.
My layman’s understanding is that the Maturity amount (including any terminal bonus or loyalty addition) minus single premium paid should be the taxable amount.
Hi @nayakd1
When you receive the survival benefit, if tax is not paid on that income in that year, then the treatment done by LIC would be correct that you have to pay tax on it at maturity.
If you have paid taxes on survival benefit in the year in which you received that then you can reduce the taxable income by that in this year!
Hope this helps
Thanks but Survival benefit was not taxable until recently. The problem has arisen because of amendment requiring life insurance companies to deduct TDS on maturity amount of single premium policies. I believe this amendment was introduced a couple of years ago.
I checked with a few CAs but everybody has a different opinion because there is no clarity as to how to compute taxable component of maturity amount.
Could you please reply to this query?
Hi @nayakd1
You can Ask an Expert for any further clarifications.