General Customer Queries on Life Insurance Tax Benefits

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General Customer Queries on Life Insurance Tax
Benefits
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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?

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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).

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

• Under section 10(10D) of Income Tax Act
• No, the maturity proceeds arent 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 10of the basic Sum Assured.
• Under pension plans, you can withdraw 1/3 of the
  maturity amount which is tax free.

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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.

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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.

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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.

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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

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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

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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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• THANKS!