Recently I saw you advising to surrender LIC Jeevan Saral policy, but you were silent on the tax implications. Kindly advise whether the surrender value is taxed?
- Thomas A F
The taxation of surrender value would depend on when the policy was purchased and the quantum of insurance cover vis-a-vis the premium.
The surrender receipts of Jeevan Saral policy is tax free if:
- the sum assured is more than five times the annual premium for policies bought before 31.03.2012.
- the sum assured is more than 10 times the annual premium for policies bought after 01.04.2012.
Otherwise, surrender value on endowment policies such as LICs Jeevan Saral policy will be added to the income and taxed as per the tax slab rate applicable to the policyholder.
This article was originally published on April 15, 2016.
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