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TDS on LIC pension scheme

QUESTION: In The Hindu dated October 6, 2003 Tax Forum article there is an error in that in LIC new pension scheme, LIC has given opinion that there will be no TDS, even though it is interest that is paid as pension and hence there will be no TDS.

ANSWER: The above communication received from S. Viswanathan, a retired Income-tax Officer, is apparently on ascertaining from LIC that tax will not be deducted at source by treating the amount as pension. It is probably a matter of understanding of the Income-tax Department and the LIC. If there is no TDS, it is so much better for the subscriber, though it does not absolve him of paying tax on the same, if his income is taxable including the pension.

S. Rajaratnam

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