Are receipts from life insurance policies on maturity along with bonus taxable?

Ans. As per section 10(10D), any amount received under a life insurance policy, including bonus is exempt from tax. However, following receipts would be subject to tax:

1. Any sum received under sub-section (3) of section 80DD; or

2. Any sum received under Keyman insurance policy; or

3. Any sum received in respect of policies issued on or after April 1^st, 2003, in respect of which the amount of premium paid on such policy in any financial year exceeds 20% (10% in respect of policy taken on or after 1^st April, 2012) of the actual capital sum assured; or

4. Any sum received for insurance on life of *specified person (issued on or after April 1^st 2013) in respect of which the amount of premium exceeds 15% of the actual capital sum assured.

* Any person who is –

i)  A person with disability or severe disability specified under section 80U; or

ii) suffering from disease or ailment  as specified in the rule made under section 80DDB.

Following points should be noted in this regard:

• Exemption is available only in respect of amount received from life insurance policy.
• Exemption under section 10(10D)​ is unconditionally available in respect of sum received for a policy which is issued on or before March 31, 2003.
• Amount received on the death of the person will continue to be exempt without any condition.