Policyholders under LIC policies are eligible to get tax deductions for both premium payments and benefits received. To the degree that you pay money under the name of the premium, you can deduct it from your taxes. Certain tax exemptions apply to the benefit received from a life insurance policy, whether it be the death benefit or the maturity benefit. So, see below the LIC tax benefits.
Tax Benefits on Various LIC Insurance Policies
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The following are the tax advantages associated with your LIC insurance policy:
Section 80C provides a tax exemption on life insurance contracts purchased from LIC.
A tax deduction of up to 20% may be taken on the premiums paid for a life insurance policy if it was acquired in your name, the name of your spouse, or the name of your kid by March 31, 2012, at the latest.
The premiums paid toward a life insurance policy are eligible for a tax advantage of up to 10% of the sum assured if the policy is obtained after April 1, 2012, in the names of the policyholder, spouse, child, or both.
Section 80C of the Income Tax Act allows for a tax deduction for premiums paid toward deferred annuities.
Tax exemption offered under section 80CCC on life insurance policies from LIC:
For those who contribute premiums from their taxable income to an annuity plan to guarantee future pension benefits, Section 80CCC offers a tax advantage.
Only the premium up to 20% of the total promised will qualify for the tax benefit if the premium paid in a given fiscal year exceeds 20% of the real capital sum assured.
The maximum deduction allowable under section 80CCC is restricted to Rs 1,50,000.
Section 80D tax exemptions for LIC policies:
- People who deposit a specific amount of money with the LIC for the support of a handicapped person are eligible for tax exemptions under section 80D.
- The maximum deduction amount for this is Rs 50,000. The cap rises to Rs. a million if the disabled individual has a serious disability.
- Section 80D allows for a maximum qualifying value of Rs. 15,000, with an additional Rs. 15,000 deduction for the parents. A tax deduction of up to Rs. 20,000 is allowed if the parents are senior citizens. The policyholder is permitted to pay up to Rs. 5,000 for preventive health examinations during the policy’s term.
- Hindu Undivided Families (HUFs) are eligible to deduct up to Rs. 25,000 for expenses incurred in the process of securing health insurance for any family members.
LIC Plans
The insured person’s death claim and maturity benefit are eligible for tax benefits under section 10(10D) of the Income Tax Act. Additionally, this section offers certain options, such as:
- First and foremost, this tax benefit is only available if the primary insurance policy is not issued as a key man policy or under section 80DD.
- The bonus payment and any other benefits obtained as a sum assured under a life insurance policy are not deductible from taxes.
- For policies issued on or after April 1, 2013, there is a tax deduction of up to 20% of the actual sum guaranteed.
- For policies issued on or after April 1, 2012, there is a tax deduction of up to 10% of the actual sum guaranteed.
- The lists of numerous tax advantages that are applicable to the life insurance plans provided by LIC are what we have already covered. To get the most out of your insurance coverage and tax benefits, there are a few crucial considerations that must be made in order to maximize your rewards.
- Rs. 150,000 is the highest amount that can be deducted as a tax exemption.
- Section 80C of the Income Tax Act applies to all other financial instruments that are tax-deducted.
- The total maximum deduction allowed under sections 80C, 80CCC, and 80CCD of the Income Tax Act is Rs1,50,000.