Annual Information Statement – Receipts from life insurance policy

Annual Information Statement and Taxpayers Information Summary are two of the new statements recently introduced by the Income Tax department.

The information reflected under the Annual Information Statement is categorized under 50 different information categories. One such information category is ‘Receipts from life insurance policy’ which is taken up and explained in the present article.

Taxability and exemption of the AIS information category ‘Receipts from life insurance policy’-

First of all, let us understand the exemption available towards receipts from a life insurance policy. Exemption provisions are covered under section 10(10D) of the Income Tax Act which states that any sum received under a life insurance policy (including bonus) is exempt. However, the exemption is not available to the following sums-

• Amount received under section 80DD(3) or section 80DDA(3);
• Amount received under a keyman insurance policy;
• Amount received under the insurance policy, which is issued after 1^st April 2003 and before 31^st March 2012, only when premium payable for any of the year exceeds 20% of the actual sum assured. However, the amount is exempt in case of death;
• Amount received under the insurance policy, which is issued after 1^st April 2012, only when premium payable for any of the year exceeds 10% of the actual sum assured. However, the amount is exempt in case of death;
• Amount received under the insurance policy, which is issued after 1^st April 2013, with respect to disable or severe disabled person or suffering from specified disease referred in rules covered under section 80DDB, only when the premium payable for any of the year exceeds 15% of the actual sum assured;
• Any unit-linked insurance policy issued on or after 1^st February 2021 if the premium amount for any of the previous year exceeds INR 2.50 Lakhs.

Certainly, the sum not included in the exemption provision will be taxable under Income Tax. accordingly, section 194DA of the Income Tax Act states that any person responsible for paying the sum which is not exempted under section 10(10D) is liable to deduct TDS @ 5%.

AIS source of information for information category ‘Receipts from life insurance policy’-

The person deducting TDS under section 194DA is also required to-

• Furnish TDS statement/ return, reflecting details of the TDS deducted, in Form 26Q on a quarterly basis; and
• Issue TDS certificate in Form 16A to the deductee.

AIS will take details from the TDS return, filed by the deductor in Form 26Q, under the information category ‘Receipts from life insurance policy’.

AIS processing of the information category ‘Receipts from life insurance policy’-

Information so captured by AIS from the TDS return will be processed in the account of deductee/ receiver in the following manner-

1. Amount grabbed from the TDS return will be treated as taxable in the hands of the recipient; and

2. The same will be taxable under the head ‘Income from other sources’.