Insurance maturity proceeds - Exemption under Section 10 (10) (d)
13 Nov, 2022 by Basker R
Need help on section 10 (10) (d). If a maturity proceeds from an insurance policy does not qualify for exemption under section 10(10)(d) [ for e.g., single premium policy or investment type policy), then the whole maturity proceeds is taxable or only the gain portion (i.e., maturity amount less premium paid) is taxable? I have given below some references from CBDT circular and recent case from IT. Need experts' guidance on this although the below links provide some guidance.
Circular No. 7/2003-Income Tax Dated 5-9-2003 (taxguru.in) (section 10.3)
Section 10(10D) Only net income is taxable upon the maturity of a life insurance policy - Faceless Compliance
Dear Basker, only the gain portion is taxable. For example if you have invested in single premium policy with premium of Rs10L and on maturity you get Rs21L then Rs21L (maturity) - Rs10L (premium paid) = Rs11L, you are liable to pay tax only on Rs11L.
Hope this clarifies.