Life Insurance Maturity Received and 1% TDS u/s 194DA deducted. So what will be the tax liability under Income Tax Act 1961? Information is as follows:

Gross amount received in maturity Rs. 4,25,000/-

Total premium paid is Rs. 3,00,000/-

Whether assessee is  required to pay tax on Gross receipt Rs. 425000 or Net receipt Rs. 125000 (425000-300000 premium paid)

Reply

As circular issued by CBDT No.7/2003 Dated 05-09-2003, the extract of which says the income accruing on such policies (not including the premium paid by the assessee) shall become taxable.  Here Such policies mean policies not exempt from tax.

Therefore, as per the above circular, Rs.1,25,000/- (4,25,000-3,00,000) will be chargeable to tax under the head income from other sources.