Income tax on pre-mature withdrawal of insurance plan (pension plan)

Querist : Anonymous (Querist) 08 October 2011 This query is : Resolved

I have a Life Insurance Policy (Pension Plan) of ICICI Prudential Life Insurance Co. Ltd. This is a Unit Policy. Market value flactuate every day. As per Policy terms and conditions, Surrender value of Policy can be withdrawn any time after expiry of 3 years.

I have paid premium for 4 years. I have claimed exemption u/s 80CCC in every year as per I.T. Act.

Now, I want to close the Policy and to withdraw the money. What will be treatment of money as per I.T. Rule which will be received from Insurance Company after closing of the Policy ? Is it fully Taxable as per I.T. Rule ? If yes, then under what head of Income it will be shown?

Kindly clarify the matter

Thanks

A.Biswas

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Sankaranarayanan (Expert) 08 October 2011
yes it is taxable under incometax .

prabhakar singh (Expert) 08 October 2011
As per 80ccc.(2)(a)&(b)of IT Act,the decision of withdrawal will amount to surrender of plan and all receipt will be treated as income in the year of receipt of FY and shall be taxable in AY.

Sailesh Kumar Shah (Expert) 08 October 2011
your surrender of pension plan shall be taxed on principal value and the bonus or interest credited to you at the time of surrender.

Sadashiv Rupchand Gaikwad (Expert) 09 October 2011
Income from other sources, the resudury last Head.Gross amount your received minus you invested amount is the net income

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