How LIC Insurance can save tax?

INCOME-TAX RATES AND TAX BENEFITS FROM LIFE INSURANCE

SOME IMPORTANT INCOME TAX BENEFITS AVAILABLE UNDER VARIOUS PLANS -

The deduction allowed for Income payment of Life Insurance Premium (Sec. 80C).

(a)    Before the 31st day of March 2012, exemption of 20% of capital sum assured a or premium paid whichever is less will be provided to the policyholder if the Life insurance policy purchased for himself or for the spouse or any child of the policyholder.

(b)   After the 1st day of April 2012, exemption of 10% of capital sum assured a or premium paid whichever is less will be provided to the policyholder if the Life insurance policy purchased for himself or for the spouse or any child of the policyholder. the exemption will be provided to the policyholder if the insurance on the life of any person is—

(i) A person with a disability or a person with a severe disability as referred to in section 80U, or

 (ii) Suffering from disease or ailment as specified in the rules made under section 80DDB, the deduction under this section is allowed only to the extent of 15% of the actual capital sum assured or actual premium paid whichever is less.

(c) Contribution to deferred annuity plans in order to effect or to keep in force a contract for deferred annuity, on his own life or the life of his spouse or any child of such individual, provided such contract does not contain a provision to exercise an option by the insured to receive a cash payment in lieu of the payment of annuity is eligible for deduction.

(d) Contribution to Annuity Plans – New Jeevan Dhara, New Jeevan Dhara-I & Jeevan Akshaya – VI. 2) Jeevan Nidhi Plan & Jeevan Suraksha Plans (U/s. 80CCC) A deduction to an individual for any amount paid or deposited by him from his taxable income in the above annuity plans for receiving a pension (from the fund set up by the Corporation under the Pension Scheme) is allowed.

NOTE: The aggregate amount of deduction under u/s 80C, 80CCC & 80CCD shall not, in any case, exceed one lakh fifty thousand Rupees.

Deduction under section 80D

a)      Exemption up to Rs.25,000/- will be provided to the policyholder if any contribution to the central government is made by himself or the spouse of the policyholder or on account of Preventive health check-up of the policyholder or his family.

b)      Additional deduction up to Rs.25,000/- if an amount is paid to keep in force an insurance on the health of parents or on account of Preventive health check-up of the parent of the assessee, whether dependent or not

c)       In case of HUF, deduction allowable up to Rs.25,000/- if an amount is paid to keep in force an insurance on the health of any member of that HUF

d)      If the sum specified in (a) or (b) or (c) is paid to effect or keep in force an insurance on the health of any person specified therein who is a senior citizen, then the deduction available will be up to Rs.30,000/-.

e)      In Case the amounts are paid in (a) or (b) or (c) on account of a preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in aggregate Rs. 5,000 /-., these deduction prime example would be LIC Jeevan Anand Policy

Jeevan Aadhar Plan (Section 80DD) :

Deduction from total income up to Rs.75000/- allowable on the amount deposited with LIC under Jeevan Aadhar, Jeevan Vishwas plan for maintenance of a handicapped dependent (Rs.1,25,000/- where handicapped dependent is suffering from severe disability)

The exemption in respect of commutation of pension under Jeevan Suraksha & Jeevan Nidhi Plans:

Under Section 10(10A) (iii) of the Income-tax Act, any payment received by way of commutations of pension out of the Jeevan Suraksha & Jeevan Nidhi Annuity plans is exempt from tax.

Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D)

As per Section 10(10D) of the Income Tax Act, 1961, any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on such policy is exempt from tax where the sum is received as a death benefit. To get exemption under the above section for the sum received other than death benefit following conditions to be satisfied:  Policy shall not be issued under Section 80DD(3), or

·         Policy shall not be issued as a Keyman Insurance Policy, or

·         policy which has been issued on or after April 1, 2003, and the premium paid in any of the years during the term of the

·         Policy not exceeding 20% of the Actual Capital Sum Assured.  a policy which has been issued on or after April 1, 2012, and the premium paid in any of the years during the term of the

·         Policy not exceeding 10% of the Actual Capital Sum Assured. Where the policy, issued on or after the 1st day of April 2013, is for insurance on the life of any person, who is—

1)      a person with a disability or a person with a severe disability as referred to in section 80U, or

2)      Suffering from disease or ailment as specified in the rules made under section 80DDB, the exemption under this section shall be available only if the premium payable in any of the years is not more than 15% of the actual Capital Sum assured.