Under the Indian income tax provisions, in case where a person is a resident and ordinary resident in India, his global income would be taxable in India. In your case, you would be a resident and ordinary resident at the time when you receive the maturity proceeds of your insurance policy (i.e after a period of 10 years), thus, the amount received would be taxable in your hands at the prevailing slab rates. In India, there is an exemption available under section 10(10D) in respect of money received on maturity of life insurance policy. The main controversy in your case would be whether this exemption is available even in respect of money received on maturity of a policy issued by a foreign insurance company. This is a debatable matter and could lead to litigation. There is a decision of the Mumbai Bench of the Income-tax Appellate Tribunal where it has been held that the exemption would be available even in respect of maturity amount of a life insurance policy issued by a foreign insurance company. If you have the ability to fight a case with the Indian tax authorities, you could take a stand based on this decision (Taragauri T. Doshi v/s. ITO).
Answered by NRIMatters Team