Skip to main content

Consequences of non-payment/failure to pay premium

Consequences

Where, in any preceding year, an assessee –
(i) terminate his contract of insurance under the Life Insurance Policy, through notice or where the contract terminates by reason of failure/inability to pay any premium, by not reviving the contract of insurance, before premiums have been paid for two years; or
(ii) terminates his involvement in any unit-linked insurance plan of U.T.I. or L.I.C. The mutual fund, through notice or where he ceases to participate due to failure to pay any contribution, by not reviving his involvement, before contributions in respect of such participation has been paid for five years; or
(iii) Transfers the home property referred to at Sl. No. ‘l’ as aforesaid, prior to the expiry of five years from the closing stages of the financial year in which custody of such property is received by him, or received back, through refund or otherwise, any sum specified therein, then –
  • No subtraction shall be permitted with respect to any of the sums entitled for deduction and (
  • The deductions of income-tax allowed with reference to the previous year or years preceding such previous year, shall be deemed to be tax payable by the assessee in the assessment year with respect to such previous year and shall be sum up to the tax on the total income of the assessee with which he is chargeable for such assessment year.
  • If any shares or debentures or units originating out of an entitled issue of capital to endorse infrastructure is transferred within three years of their attainment, the tax rebate acceptable on this account shall be deemed to be the tax liability of the previous year in when such premature transfer happened.
Sub-section (3) provides that the provisions of Sub-section (2) shall be applicable only to an extent of any premium or other payment made on an insurance policy other than a contract for an overdue/deferred annuity as is not in a surplus of 20% of the actual capital sum secure.

Explanation

While computing any such actual capital sum, no account shall be considered–
(i) of the value of any premiums decided to be returned, or
(ii) Any benefit through bonus or otherwise over and above the amount actually assured, which is to be or may be received under the policy by any person.

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.

Comments

Post a Comment

Popular posts from this blog

How can digital marketing help your startup to grow faster?

No one can deny the fact that startups need recognition. Startups, being new to the market, need to tell people that they exist. Market primarily consists of potential customers, investors as well as partners. And these are vital for any business. Without marketing, you and your startup is nothing. No one knows you, so they won’t even bother to spare you a glance. Your idea may be unique and outstanding, but without marketing, that idea is completely useless. Being an entrepreneur, you need to know how to sell your products and services. To sell, people need to know about your existence. You need to attract them. To attract customers, you need marketing. Now, there are two primary forms of marketing. First is traditional marketing and the second being, digital marketing. How are you supposed to choose the best way? How are they going to help? The same is discussed below. Traditional marketing is nothing but the old ways of promoting a company. It can be done via posters and banners. ...
7 comments
Read more

The 3 Relationships That Matter When Your Company Is Being Acquired

Getting acquired is one of the major moments of your life. It is a mix bag of feeling because your startup is like a baby that you nurtured from the start and now after selling it away, things will never be the same and you might not have the same freedom to run that business as you used to. The whole process itself is very tedious and involves a lot of aspects. Your legal advisor and countless manuals may furnish you with all the details however you might not have anyone who would guide you how to handle the people aspect related to you’re the whole process of acquisition. So let me help you now. There are a lot of people involved and you need to have cordial relation with almost all of them and have no grudge against any. During this delicate time, it is essential for you to maintain your calm and no matter how stressed you are from the inside, you must stay calm on the outside. And in this critical time, it is imperative for you to have soft skills and here are three important rela...
2 comments
Read more

5 Tips to Help Your Startup Operate Smoothly from Day 1

To pass the different stages of building a startup, you need not climb the treacherous mountains but pass through the valleys paved by others. Starting your own venture can be a quite daunting task. The can be like hurtling down a potholed road with the ups and downs and the unpredictability that takes extra efforts to overcome. It is good to heed the advice of the experienced people. It is always advised to take away from experiences of a person who has gone through the potholed road. To be an entrepreneur in competitive times like these can be a daunting and a demanding task. You need to give in all you have with zero complaints. The following are the best ways to get through the startup transition on day 1: 1. Keep your heart full, your mind clear and your body active You need to keep yourself well through the transition process. It’s good to take some time out for yourself. Do some physical activity, read in your free time and learn every time. You need to understand that...
1 comment
Read more