Taxation on insurance claims


Hello Experts,

  My uncle has expired and is survived by his wife and 2 adult sons. My uncle was Hindu.He owns two houses in Mumbai  and In both these houses, his wife (aunt) is the sole co-owner. He has not left a will. My aunt is a house-wife and is not working anywhere.

He had invsted in HDFC Life insurance policies, LIC policies and the recent insurance scheme launched by Prime Minister - Modi.

My questions:

1. What needs to be done to start claiming the insurance? What papers are required?

2. Whatever claim my aunt gets, will that be taxable?

3. Do my aunt needs to file a return for all the income through insurance claims?

 

 
Reply   
 
Executive

1.  Approach the Insurance authorities, they will explain the procedure in detail.

2.  Yes.

3.  Yes.

 

 
Reply   
 


Retired employee.

When you approach on line portal, think and understand the limitations of advises sought through portal.

1)Your query involves process involved with three insurance companies and taxation.

2)First obtain sufficient number of original death certificates, copies of medical reports if any disclosing reasons of death,  take sufficient number of photo identities copies of nominee., with original, visit insurance company , take individual original policies  fill the prescribed form of claim and obtain acknowledgment.

Wait for a month or two enabling insurance companies to settle the claim.

If any taxation is there, the insurance company deducts TDS depending on the claim amount and generally it can not be done.

First let the claims be settled for all cases, and then consult any chartered accountant, to know as to how to avoid tax, if any due through investment in approved securities.

(If she is having children, without information and knowledge do not take initiative and lead without some other's assistance, as this may cause misunderstand in any financial matters)

 
Reply   
 

Thanks to both of you Mr. Srinivas and Mr.Prasad for sparing time for replying to my queries.

To update you, we have initiated claim process with almost all the companies. We have submitted the neccessary documents. The lead time mentioned is 6-8 weeks. The only thing to be planned is to re-invest the claim amounts.

Are there any recommendations to reduce tax liabilities?

 

 
Reply   
 
Retired employee.

The entire investment depends on present source of income, age, gender and needs.  Only a tax consultant can guide you.   Till that time you can park entire amount in any Bank's fixed deposit where exemption for tax is permitted (till such time you decide, the deposit can not be taxed...you can decide in one year).  Invariably register nomination.

 
Reply   
 

The insurance policy death claims are not taxable.  Any return of investment of the funds so obtained shall fetch them are taxable. 

For death claim processing, you may visit the concerned insurance branch office and issue a death intimation with a copy of the death certificate and ask for the claim forms, fill up the forms with proper details and submit it along with your bank account number, the amount will be credited directly to the bank account with intimation to you. 

 
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