How to compute tax liability of life insurance proceeds at maturity?

Siddhartha
Sep 1, 2019

How to calculate and tax liability on the maturity proceed received from Life Insurance, from which TDS has been deducted.

Also, let me know how to file it in ITR

1 Answer
Sep 4, 2019

Payout received form a life insurance policy i.e. sum assured plus any bonus, may or may not be taxable.

According to Section 10(10D) of the Income Tax Act, the payout is taxable if:

  1. Policy was issued before 31st March 2012 and the premium paid in any year exceeds 20% of the sum assured.
  2. Policy was issued after 31st March 2012 and the premium paid in any year exceeds 10% of the sum assured.

So please check your policy issue date and its details. Since TDS was deducted on your payout, it is likely that your policy payout is taxable.

How to include this in ITR?

  1. You will have to include the payout as 'income from other sources'.
  2. In the TDS section, ensure that the TDS deducted is included (this is included automatically in most cases)
  3. The income gets added to your total income is taxed as per your income tax slab (will happen automatically in the ITR form)

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