Date:15/09/2008 URL: http://www.thehindu.com/2008/09/15/stories/2008091550031500.htm

Business

Proceeds of LIC policies are generally exempt

Please confirm whether any sum, including bonus received on maturity over and above the amount invested under LIC policies, Bhima Nivesh, Bhima Plus and the like of 10 years’ term, is exempted from income tax even now?

Proceeds of policies covered for life is exempt under Sec. 10(10D), subject to the exception as in respect of Keyman Insurance Policy or where a deduction was availed under Sec. 80DD or 80DDA in respect of premia paid. The exemption covers not only the maturity amount but also bonuses. Exemption is generally available for policies, which cover the risk of life. Bhima Nivesh and Bhima Plus are instances of such policies, so that the proceeds are exempt.

S. RAJARATNAM