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CA Final · Direct Tax Laws & International Taxation · Income from Other Sources

Priya Nair, a resident individual, received Rs. 9,00,000 during the tax year on maturity of a non-ULIP life insurance policy, including bonus. The sum is not excluded under Schedule II (Table: Sl. No. 2). Premiums paid over the term total Rs. 7,20,000, of which Rs. 1,50,000 was claimed as a deduction under the Act in earlier years. Under section 92(2)(l), what is the amount chargeable under Income from other sources?

Rs. 3,30,000. Only premiums not claimed as a deduction are subtracted from the maturity proceeds. Premium not claimed is Rs. 7,20,000 less Rs. 1,50,000, which is Rs. 5,70,000, so the taxable amount is Rs. 9,00,000 minus Rs. 5,70,000.

  1. ARs. 1,80,000
  2. BRs. 3,30,000Correct
  3. CRs. 9,00,000
  4. DRs. 30,000

Explanation

The chargeable amount is the sum received exceeding the aggregate of premium paid and not claimed as a deduction. Premium not claimed = 7,20,000 - 1,50,000 = 5,70,000. Taxable = 9,00,000 - 5,70,000 = Rs. 3,30,000. Rs. 1,80,000 wrongly deducts the full premium of Rs. 7,20,000.

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