There is no Income tax Liability on Prematurity of LIC But there are Some Restrictions. Section 80C Says that Invest in Life Insurance for at least 2 Years. After that if You Surrender your Life Insurance, then you need not to Pay tax on Surrender Value. Relevant Portion of Income Tax Bare Act is as under:- (5) Where, in any previous year , an assessee— ( i ) terminates his contract of insurance referred to in clause ( i ) of sub-section (2), by notice to that effect or where the contract ceases to be in force by reason of failure to pay any premium, by not reviving contract of insurance,— ( a ) in case of any single premium policy, within two years after the date of commencement of insurance; or ( b ) in any other case, before premiums have been paid for two years ; or ( ii ) terminates his participation in any unit-linked insurance plan referred to in clause ( x ) or clause ( xi ) of sub-section (2), by notice to ...
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