We had purchased LIC Market Plus Plan several years back and have been paying premiums regularly. The same matured this year and 1/3rd was commuted and paid to us as a lump sum. An annuity has been purchased for the remaining and we are receiving pension from the same. Please note: This is not in anyway related to employment, its a separate ULPP that we have purchased.
Given this context I have the following questions:
Is the 1/3rd lump sump payment exempt from tax? If so, I suppose this should be shown under the head exempt income?
The balance 2/3rd is used for annuity - must this 2/3 also be offered for taxation?
I understand that the pensions payments arising every year out of the annuity have to be offered for taxation - I suppose this is to be shown under income from other sources?
Since the time I posted this question, I’ve figured that the commuted pension is exempt from tax under 10(10a) since the pension plan is by LIC and hence covered under 10(23aab).
Is the above understanding correct?
How do I show this in in the ITR. Under Exempt Income → Nature of Income I see many sections but not 10(10a). So for such a case do I simply show it under ‘Any other’?
If the income is exempted from taxes you can show it in schedule exempt income. Moreover, yes, if the particular section is unavailable, you can show it in any other.