General Customer Queries on Life Insurance Tax Benefits

Table of Contents:General questions asked by consumers related to insurance tax benefits:

Is there any Tax Benefit on the premium I pay for my life insurance policy? After the maturity of my policies, will the maturity proceeds be taxable? I pay the premium on policy for my wife/husband/child, can I claim Tax benefits? If I stop paying premiums on my life insurance or pension policies, can I claimTax

Benefits? What are the Tax benefits available on medical insurance premiums? Is Service Tax applicable on premiums paid on insurance products? What are the tax benefits available on pension plans?

Is there any Tax Benefit on the premium I pay for my life insurance policy?

Under Section 88 of Income Tax Act:

If the assessment year for your life insurance policy is up to 2005-06, then Rebate is available for amount paid as premium.

Under Section 80C of Income Tax Act If the assessment year for your life insurance policy is 2006-07 or after that then

the premium paid qualifies for a deduction. You can claim deduction on premium paid for a maximum of total income. The deduction can be equal to 100% of the qualifying investment including

insurance premium, or Rs. 100,000(maximum annual ceiling of Rs. 1,50,000).

After the maturity of my policies, will the maturity proceeds be taxable?

Under section 10(10D) of Income Tax Act:

No, the maturity proceeds aren’t taxable after the maturity of life insurance policies

To ensure tax benefits for policies issued on or after 1st April, 2012 premiums paid in any year do not exceed 10%of the basic Sum Assured.

Under pension plans, you can withdraw 1/3 of the maturity amount which is tax free.

I pay the premium on policy for my wife/husband/child, can I claim Tax benefits?

Under Section 80C of the Income Tax Act:

If the assessment year for your life insurance policy is up to 2005-06, you can ensure a tax rebate on the insurance premium paid by you for your wife/husband/child's policy

If the assessment year for your life insurance policy is up to 2006-07 or later the policy premium qualified deduction of tax.

If I stop paying premiums on my life insurance or pension policies, can I claimTax Benefits?

No! If you stop paying premiums on my life insurance or pension policies, this would discontinue your policy and thus you cannot claim any tax benefit.

What are the Tax benefits available on medical insurance premiums?

Under Section 80D:

You can avail Tax benefits available on medical insurance premiums: If the life Insurance premium paid (cash mode) or Rs 10,000,

whichever is lower. Deduction amount - Up to Rs. 15,000 for any dependent or Rs 20,000

for any member of your family who is a senior citizen above 64 years. Assessee is allowed to make any payment on account of preventive

health checkups upto Rs. 5,000 within prescribed overall limit.

Is Service Tax applicable on premiums paid on insurance products?Yes , all premiums & charges paid on insurance products are subject to applicable service taxes. However there has been an increase in services tax amount due to Swachh bharat cess.Impact of Swachh bharat cess (SBC) on Insurance premium

What are the tax benefits available on pension plans?

Under section 80CCC:

On the life insurance premium paid you can rebate tax benefits up to Rs. 1.0 lakh.

You can withdraw 1/3 of the maturity amount which is tax free. If you purchase an annuity with the remaining two-third amount. Pension

receipts from the same are part of your income and taxed accordingly. Max of 10% of salary deduction is application under scheme notified by the

Central government, if you are an employee of the Central Government on or after January 1, 2004

If the Life Insurance Corporation of India on or after August 1, 1996 sets up an income or fund then for you it is exempted from Income Tax

Conclusion: The above described is just a limited assortment of general queries asked by customers while getting enrolled for Life Insurance Policies.

If you have more Life Insurance related queries, get them resolved here: http://goo.gl/oyQKQp

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