CA Sandeep Kanoi

CA Sandeep KanoiLife insurance policies can be used as tax planning tool as premium paid on Insurance Policies is eligible for tax benefits under Section 80C of the Income Tax Act 1961 (Act) and Maturity Proceeds are also eligible for exemption under section Section 10(10D) and Section 10(10A)(iii). Life Insurance helps Assessee in only tax saving , achieving their long term goals and it also provides Comprehensive financial protection against unforeseen events for your family.

Deduction U/s. 80C in respect of life insurance premium

Who is Eligible Assessee – Individual and Hindu undivided family.

Maximum Limit – Maximum Deduction allowed under this Section is Rs. 1.50 Lakh and the sum includes payment on other allowable investment option available Under Section 80C of the Income Tax Act,1961. It is to be further noted that combined Maximum limit of deduction under Sec 80C & 80CCC & 80CCD (1) is Rs 1,50,000.

Deduction limit: Deduction will be allowed only for premiums upto a maximum of 10% of the sum assured for policy issued on or after April 1, 2012. In case of policy issued before March 31, 2012, deduction will be allowed only for premiums upto a maximum of 20% of the sum assured.

Allowable on Payment- Only life insurance premia paid or deposited during the year are allowable as deduction under Section 80C.

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Disallowance: The deductions claimed earlier will be taxable as income if the policy is terminated either by notice or by failure to pay any premium in case of

  • Single premium policy: within 2 years after the commencement date
  • Regular premium policy: before premiums have been paid for 2 years.

On Whose Life insurance premia Can be Paid-

(i) in the case of an individual (Resident or Non Resident)

  • On his own life
  • On Wife/husband(dependent or not)
  • Child

-Major or minor (dependent or not)

– Married or unmarried Daughter / Son  (dependent or not)

(ii) in the case of a Hindu undivided family, any member thereof;

Also Read- Sec 80C deduction available on Life Insurance paid for adult children /married daughter

Premium Paid on life of parents, Brother, Sisters or In-laws not Eligible- Please note that life insurance premium paid by you for your parents (father / mother / both) Brother, Sisters or your in-laws is not eligible for deduction under section 80C.

More than one insurance policy- If you are paying premium for more than one insurance policy, all the premiums can be included.

Premium Paid to LIC and Other Insurance Companies- It is not necessary to have the insurance policy from Life Insurance Corporation (LIC) – even insurance bought from private players can be considered here.

Premiums on pure endowment assurance policy – A pure endowment assurance policy is an assurance on the life of the assessee and hence the premium paid on such policy would be eligible to rebate under section 80C.

Taxability of Maturity Proceeds

Section 10(10D)

The proceeds under a life insurance policy are exempt under Section 10(10D) of the Act, subject to the provisions of the said section.

Section 10(10A)(iii)

Commuted Pension received from Pension fund (Pension Plans approved by IRDA) would be tax-free.

Service Tax on Life Insurance Premium

All premiums and charges are subject to applicable taxes including service tax, education cess and secondary and higher education cess as applicable under the prevailing tax laws.

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49 responses to “Life Insurance Premium- Tax benefit on Payment and Maturity”

  1. SURENDRA KUMAR GARG says:

    I HAVE RECEIVED PENSION FROM LIC RS.39500/ PER YEAR UNDER JEEVAN SURAKSHA POLICY. IS THE AMOUNT TAXABLE?

  2. Rajeev Singh says:

    Can wife clam LIC premium of husband and own parents

  3. Tushar More says:

    Sir, I have taken 5 LIC Bima Plus Plan policy on 2005 of Rs 2,00,000 each totalling Rs. 10,00,000. Now in year 2015, i have received the proceeds of Rs. 28 Lacs. My Query is since i am not eligible for deduction under sec 10(10D), whether the whole proceeds of 28 lacs shall be taxed or only the gain of Rs 18 Lacs shall be taxed under IFOS. Further, since my investment was made from taxed income and maturity amount is also taxable, it will amount to double taxation.Is there any relief in the ACT.

  4. Arun Rajput says:

    I am a grand parent. I am planning to buy LIC plan in the name of my grand children. Is this plan is eligible for Tax exemption under 80c. I shall be making all the premium payments.

  5. Arun Rajput says:

    Explain section 87a.

  6. ranu singh says:

    No you cannot claim exemption for insurance premium paid for your grandson.

  7. Paras Chhajed says:

    Yes.

  8. Paras Chhajed says:

    Yes.
    CA Paras Chhajed

  9. Anisha says:

    Yes. Unlike Section 80D for medical insurance premium, there is no such condition under section 80C. Hence, LIC premium paid in cash is also eligible for deduction

  10. rajib kumar roy says:

    my premium paying date 30th March 2016 I deposit a cheque in branch lic(553) drope box negligence of collection cheque premium collect 6th April 2016 can i got benefit against premium amount for The F/A 2015-16?

  11. Viren Bansal says:

    I purchased an life insurance with annual premium of rs. 112000 with sum assured of rs.10 lac and additional accident rider of rs. 10 lac. I want to know .. The maturity or survival benefit amount will be chargeable to income tax or exempt under sec 10

  12. kvkrao says:

    no. you can’t claim the deduction.

  13. Anjana says:

    Can Wife claim the benefit Under 80 C for LIC premium of spouse and child if paid by wife; if he is not claiming

  14. Jitendra says:

    Can Husband claim the benefit under 80 C for LIC premium of spouse and child if paid by wife; if wife is not claiming.

  15. soman says:

    Can I claim tax refumd for the premium paid by me for the pension plan of my wife under 80CCC

  16. Padam chand aggarwal says:

    Whether maturity proceeds of rs.190000/-as against 10000/- per year for 12 year pension policy from icici are also exempt from IT. If not, which part of the maturity amount is taxable. If yes, what should be the minimum term of unit linked policy to be eligible for exemption – See more at: http://taxguru.in/income-tax/life-insurance-premium-tax-benefit-payment-maturity.html#sthash.7ONo55KR.dpuf

  17. PKB Menon says:

    I am a grand parent. I am planning to buy Canara HSBC Insure smart plan in the name of my grand children. Is this plan is eligible for Tax exemption under 80c. I shall be making all the premium payments.

  18. Vipin Gangwal says:

    Can we avail 80C deduction for LIC premium including service tax or not.

  19. Himanshu says:

    Hi. Can my wife claim for the premium paid on lic by my mother/father in law for 80c deductions.

    • alphonse says:

      i have paid my three years due lic policy premium in this current year, do i get tax rebate on my entire premium amount or only on my yearly premium?

  20. ramsaran says:

    what is rebate LIC Single Premium Endowment Plan (Table No. 817) Premium for income tax in f.y. 2015-16

  21. kedarsingh says:

    if life cover 1 lac, annual premium Rs10000 i pay 2 annual lic premium in same financial year, what wil be effect on 80c and 10(10D)maturity

    thanking you

    kedar singh
    m 9210311165

  22. Manoj Rajwania says:

    Dear Sir,
    Please let me know about LIC’s Jeevan Akshay-6 (one time investment pension plan) are eligible for tax rebates?

    • Nilesh Deshpande says:

      What will be the tax benefit of Jeevan Akshay single premium plan? Is all the premium paid would be deducted for tax saving purpose?

  23. R.Satyanarayana Murthy says:

    is service tax paid on Life Insurance premium is eligible for exemption under Section 80C

  24. Manendra says:

    Hi Hanif,
    No, only you are eligible to claim benefit.

  25. hanif says:

    Can Premium paid for wife/Son LIC can be claimed by both husband and wife in their Income ??? If yes proportion of claim of amount to be divided ???

    • CA SANJEEV BANSAL says:

      Yeas in my opinion both husband and wife can claim deduction u/s 80C on LIP of their children in prportion to amount paid by them because as per provision of sec. 80C the language is to keep in force the LIP

  26. ravindra.pc says:

    Hi.
    I am filling my tax..
    I need information about.. where can I fill show the “Insurance taken for car/2-wheeler” can claim? is it under 80c..?
    And where we can put personal loans (it’s earning from other resources) and car loans..?

    Thanks
    Ravindra

  27. DINESH MATHUR says:

    deduction of income tax for premium paid for LIC OF MARRIED AND NOT DEPENDENT SON WORKING JOB ABROAD,CAN BE CLAIMED OR NOT.

  28. Sandeep says:

    Whether wife can claim lic premium in her return, paid from husband’s bank account?

  29. gaurav says:

    can father claim deduction for premium paid for son..but through son’s bank account.

  30. Sunny says:

    Whether the payment made for LIC premium paid in cash eligible for deduction??

  31. Protip Kushari says:

    Is the service tax & edu cess paid with insurance premium is elligible for tax saving u/s 80C ?

  32. yogesh says:

    is service tax portion, included in Insurance Premium, is also allowed as Deduction u/s 80C. – See more at: http://taxguru.in/income-tax/life-insurance-premium-tax-benefit-payment-maturity.html#sthash.JyLcNiZB.dpuf

  33. Asok Kumar Bardhan says:

    Thank you much for such Tax detail in lucid manner.

  34. pankaj says:

    while calculating total premium paid under 80C of the income tax will include service tax paid on insurance premium

  35. ganesan says:

    Whether insurence premium paid for keeping life of Grandchildren qualify for deduction U/s 80C for grandfather?

  36. RAJAGOPALAN says:

    very good and informative article.

  37. Nitin Chaoudhary says:

    is service tax portion, included in Insurance Premium, is also allowed as Deduction u/s 80C.

  38. Amit Anand says:

    Whether premium paid for keeping life of Grandchildren qualify for deduction U/s 80C for grandfather.

  39. Saiyed Nayeem Ahmad says:

    Thanks for detailes of Tax laws in a manner everyone can understand & will be able to remind without looking for any hard copy of law.

  40. BIJAL says:

    Sir, in Employer Employee scheme , premium is allowable u/s. 37(1) in companies case.

  41. Harshan V V says:

    Thanks. nice information

  42. Venkata Subramanian says:

    The author has clearly stated that life insurance premium paid for spouse is allowed as a deduction.

  43. s sudarshana says:

    Good article. Eye opener for those who discontinue and do not bother to pay the tax in respect of tax exemption claimed earlier.
    Author may kindly clarify weather the premium paid towards spouse is exempt or not. (Whole life and other insurances)

  44. P Aravindhan says:

    Whether maturity proceeds of unit linked policies are also exempt from IT. If not, which part of the maturity amount is taxable. If yes, what should be the minimum term of unit linked policy to be eligible for exemption

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