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CS Executive · Tax Laws and Practice · Income from Other Sources

Mr. Vivek Iyer receives, during the tax year, a sum from a life insurance policy (not a unit linked policy, and not a keyman policy) which is not exempt under Schedule II (Table: Sl. No. 2). The sum received including bonus is Rs. 12,00,000. Premiums paid during the term were Rs. 8,50,000, of which Rs. 1,50,000 was claimed as a deduction under the Act earlier. Under section 92(2)(l), what is chargeable as income from other sources, ignoring the prescribed computation manner?

Rs. 5,00,000 is chargeable. The sum received exceeds only the premium that was not claimed as a deduction, which is Rs. 7,00,000 (Rs. 8,50,000 less Rs. 1,50,000 claimed). Rs. 12,00,000 less Rs. 7,00,000 gives Rs. 5,00,000.

  1. ARs. 3,50,000
  2. BRs. 5,00,000Correct
  3. CRs. 12,00,000
  4. DRs. 1,50,000

Explanation

Only premium not claimed as a deduction is subtracted. Premium not claimed = 8,50,000 - 1,50,000 = Rs. 7,00,000. Taxable = 12,00,000 - 7,00,000 = Rs. 5,00,000. Subtracting the full premium of Rs. 8,50,000 gives Rs. 3,50,000, which wrongly ignores the deduction already claimed.

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