Life Insurance plays a critical role in tax-planning. By investing in a life insurance plan, you can claim deductions of the premiums paid from your taxable income as per the provisions of the Income Tax Act, 1961. This means that the insurance premiums you pay, helps in reducing your tax liabilities.
In case of some life insurance products, maturity proceeds also come under exempted incomes. This means, no tax is payable on benefits received on maturity or on death subject to provisions of section 10(10D). Hence Life Insurance products are the best choice that ensures your family is always protected and you get additional savings through tax benefits.
Important Sections:
Section 80C - Premium paid on Life Insurance policies: You can claim deduction of life insurance premium paid from your taxable income as per the provisions of section 80C. Actual deduction is restricted to 10% of the minimum capital sum assured or premium paid whichever is lower. Further, the overall limit of deduction available under section 80C is Rs. 1,50,000/-.
Section 80CCC: Premium paid on Pension policies: You can get deduction from your taxable income towards premium paid for Pension policies up to a limit of Rs 1,50,000/-. Surrender of the Plan or Pensions/ Annuities received are taxable as per prevailing tax laws.
Section 80CCE: Under this section, the overall limit for deduction under Sections 80C, 80CCC and 80CCD(1) is Rs. 1,50,000/-.
Section 80D - Premium paid on Health Insurance policies: You can get deduction of premium paid towards health insurance policy taken for self, spouse, dependent children and parents. Limits are as follows:
Rs. 25,000 deduction is allowed for self , spouse and dependent children (Limit is Rs. 30,000 if the age of insured is 60 years or more)
Additional deduction of Rs. 25,000 towards health insurance premium paid for covering parents (Limit is Rs. 30,000 if the age of insured is 60 years or more).
Section 10(10D):) Proceeds from Life Insurance policies are exempt subject to conditions of section 10(10D).
Section 10(10A):) Payment received on commutation of a Pension policy is exempt from tax.
Please note: The Tax write-up above is for general understanding and reference. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. Tax laws are subject to amendments from time to time. ICICI Prudential Life Insurance Company Limited expressly disclaims any liability to any person, if tax benefits stated above are denied to the customer. W/II/127/2015-16.
