Article
From a taxman lens: Life Insurance Policy vis-à-vis Annuity – The modern-day conundrum
By Samyak Navedia
The drastic difference in income-tax treatment of both the instruments – Life Insurance Policies and Annuities, requires closer examination of their meaning to distinguish one from another. The article in this issue of Direct Tax Amicus, for this purpose, explores the meaning propounded by various judicial interpretations and legal dictionaries, and also explores the question as to whether annuity is merely return of the capital invested. Demonstrating that there is a thin line of difference between features offered by modern iterations of life insurance policies and annuities, the author points out that it is crucial for insurance companies to take proactive steps to separate the elements of the life insurance policies from that of annuities. He in this regard points out that from income-tax perspective, payment of benefits under a life insurance policy without the requirement of life cover could result in taxation of the entire policy proceeds.
Notifications & Circulars
- Due date for filing Form No. 26QE, which was required to be filed during the period 1 July 2022 to 28 February 2023, ex-post facto extended
- No TDS on certain payments made by any ‘payer’ to a person being a Unit of International Financial Services Centre (‘IFSC’)
- Tax Treaty between India and Spain – Amendment notified
- Time-limit for verification of return of income after uploading clarified
Ratio decidendi
- Assessing Officer has no power to propose transfer pricing adjustments not proposed by Transfer Pricing Officer – Delhi High Court
- No TDS liability on deposits made to Calcutta Dock Labour Board for disbursement of wages to employees on account of statutory mandate – Calcutta High Court
- Subscription fee received for granting access to online database is not ‘royalty’ under Section 9(1)(vi) of Income Tax Act and under Article 12(3) of India-USA DTAA – ITAT Mumbai
- No penalty under Section 271B where deposits made by assessee were not on his own account – ITAT New Delhi
- Incriminating material for one assessment year cannot trigger provisions of Section 153C for proceedings for other assessment years – Delhi High Court
