‘Why is my survival benefit amount taxable?’

Do you have any personal income tax query?

Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, will answer your queries.

Please mail your queries at [email protected] with the subject line Ask Mihir.

Deepak Deshwal: I have taken a plan of SBI Smart Gold Money Back 5 year back. Till now I have submitted 5 premium of approx 98 K plus. SBI gave me a survival benefit after three years (1.8) and deducted the TDS. I asked them why the amount is taxable and they replied because the yearly premium is more than 10 times of Sum Assured (9L) so survival benefit /Maturity benefit and Surrender value will be taxable. I am surprised as I am getting less amount as compared to amount giving as a premium and still the amount is taxable.

Is there any way to make the amount free from Tax? What is your suggestion on this?

Mihir Tanna: They are correct on the part of deducting TDS. Exemption on survival benefits is available only if premium is less than 10 times of sum assured. Only normal deductions like housing loan interest, investment in tax saver avenues like MF, NPS etc., can save your tax.

Amalendu Debroy: I am 82-year-old lady. In spite of submitting Form 15H in the beginning of financial year, i.e. in the first week of April, SBI is still making TDS deductions from my account.

Received no reply on my complaint.

I have interest from FD and Senior Citizen Savings Scheme and no other earning. Is there any limit to interest amount with Form 15H?

Mihir Tanna: Form 15H is for the declaration that no TDS is required to be deducted on interest income, as tax liabilities on total income earned is zero. So if Interest Income is above Rs 5 lakh (which is the minimum exemption limit for super senior citizens), Income is likely to be taxed and TDS is required to be deducted by payer of Interest.

Chandra Shekhar Pant: My question is why Govt of India cannot pay back after retirement age to taxpayers. For example if I pay 1 Cr as tax during my service period in Pvt Industry after that what is there for me? If Govt pay at least 10 % return on Total IT paid it will be a
great initiative and everybody inducing a rickshaw puller will also like to Pay IT.

Mihir Tanna: With due respect sir, I understand your concern. Considering expected growth in India and government policies we can hope that in the next decade India will become a developed country and in spite of population issues, one day the government will be able to make such policies which are in existence in Foreign countries for senior citizens. Meanwhile, the government is motivating taxpayers through income tax provisions to create corpus for retirement and we can appreciate that.

Read more of Mihir Tanna’s responses here.

Note: The questions and answers in this advisory are published to help the individual asking the question as well the large number of readers who read the same.

While we value our readers’ requests for privacy and avoid using their actual names along with the question whenever a request is made, we regret that no question will be answered personally on e-mail.

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