My wife and I had purchased a policy each of Aviva Unit Linked Pension Plan in 2002. While my wife's policy matured this year, I surrendered my policy which was maturing in 2019. What are the income tax implications for both of us?
- Nitin Nadkarni
When pension plans mature, irrespective of whether they are unit-linked or not, only 1/3rd of the maturity amount is given to the investor as a lump sum. This lump sum amount is tax-free. The balance 2/3rd is converted to an annuity and one starts to get regular pension from this corpus post maturity. The pension thus received, is treated as income and is taxed as per your applicable tax slab. On Surrender of pension plan before its maturity, then the entire sum receivable is taxable.
This article was originally published on July 12, 2016.
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