Are LIC premiums and maturity amounts taxable for NRIs? Can you claim deductions? This guide explains all NRI LIC tax benefits under Indian law – in simple terms.
Do NRIs Get Tax Benefits on LIC Policies?
Yes, NRIs can claim tax benefits under the Indian Income Tax Act if they have taxable income in India. Two major sections apply:
- Section 80C – Tax deduction on premium paid
- Section 10(10D) – Tax exemption on maturity amount
Section 80C – Tax Deduction on Premiums
You can claim up to ₹1.5 lakh per financial year for LIC premiums paid under Section 80C, provided:
- You file Income Tax Return (ITR) in India
- The policy is in your name, spouse’s, or children’s name
- The annual premium is not more than 10% of the sum assured (for policies issued after April 1, 2012)
Example: If you earn rent or interest in India and file ITR, you can reduce your taxable income using LIC premium payments.
Section 10(10D) – Tax-Free Maturity
LIC policy maturity proceeds are exempt from tax if:
- Premium does not exceed 10% of sum assured (for policies issued after April 1, 2012)
- The policy is not a Keyman Insurance Policy
Note: The tax-free status applies even for NRIs, but you should check DTAA (Double Taxation Avoidance Agreement) with your country of residence.
What If You Don’t File Indian Taxes?
- If you don’t have taxable income in India, you can still buy LIC policies
- Tax benefits under Indian law won’t apply until you start filing ITR
- Check if your country taxes worldwide income (e.g., USA)
TDS on LIC Payout for NRIs
- LIC may deduct TDS (Tax Deducted at Source) on maturity or surrender amount
- You can file a tax return in India to claim refund (if applicable)
- Form 10F and TRC (Tax Residency Certificate) may help avoid double taxation
Best Practices for NRIs
- Keep proof of all premiums paid from NRE/NRO accounts
- File ITR in India if you earn Indian income
- Consult both Indian CA and local tax advisor abroad
- Choose LIC plans that comply with 80C and 10(10D) limits
💬 Still Unsure?
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