IMPORTANT INCOME TAX BENEFITS AVAILABLE UNDER VARIOUS PLANS OF LIFE INSURANCE FOR ASSESSMENT YEAR 2016-17/FINANCIAL YEAR 2015-16

1) Deduction allowable from Income for payment of Life Insurance Premium (Sec. 80C).

(a) Life Insurance premia paid in order to effect or to keep in force an insurance on the life of the assessee or on the life of the spouse or any child of assessee & in the case of HUF, premium paid on the life of any member thereof under an insurance policy, (other than a contract for a deferred annuity,) issued on or after 1st April 2003 but issued on or before the 31st day of March 2012 shall be eligible for deduction only to the extent of 20% of the actual capital sum assured.

(b) Life Insurance premia paid in order to effect or to keep in force an insurance on the life of the assessee or on the life of the spouse or any child of assessee & in the case of HUF, premium paid on the life of any member thereof, under an insurance policy, (other than a contract for a deferred annuity,) issued on or after the 1st day of April 2012 shall be eligible for deduction only to the extent of 10% of the actual capital sum assured.

Where the policy, issued on or after the 1st day of April, 2013, is for insurance on life of any person, who is—

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

(ii) suffering from disease or ailment as specified in the rules made under section 80DDB,

deduction under this section is allowed only to the extent of 15% of the actual capital sum assured.

(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 & New Jeevan Suraksha – I Plan (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 pension (from the fund set up by the Corporation under the Pension Scheme) is allowed upto Rs. 150000 within overall limit in section 80CCE.

NOTE: The aggregate amount of deduction under u/s 80C, 80CCC & 80CCD(1) shall not in any case exceed one lakh fifty thousnad Rupees .

3) As per new subsection (1B) to section 80CCD additional deduction in respect of any amount paid up to Rs. 50000 for contributions made by any individual assessee under the NPS.

4) Deduction under section 80D

a) Deduction allowable upto Rs.25,000/- if an amount is paid to keep in force an insurance on health of assessee or his family (i.e. Spouse & dependent children) or any contribution made to the central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf or on account of Preventive health check –up of the assessee or his family .

b) Additional deduction upto Rs.25,000/- if an amount is paid to keep in force an insurance on 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 upto Rs.25,000/- if an amount is paid to keep in force an insurance on 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/-. Here senior citizen means the person who is of sixty year or more during the previous year.

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

f) For the purpose of deduction , the payment shall be made by

i. Any mode, including cash. In respect of any sum paid on account of preventive health check up .

ii. Any mode other than cash in all other cases.

g) The insurance as mentioned above shall be in accordance with the scheme framed by

i) the General Insurance Corporation of India as approved by the Central Government in this behalf or;

ii) Any other insurer and approved by the Insurance Regulatory and Development Authority.

5) Jeevan Aadhar Plan (Sec.80DD) :

Deduction from total income upto Rs.75000/- allowable on amount deposited with LIC under Jeevan Aadhar Plan, for maintenance of an handicapped dependent (Rs.1 ,25,000/- where handicapped dependent is suffering from severe disability)

6) 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.

7) 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 However, to get exemption under above section for sum received other than death benefit

§ 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.

§ 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 life of any person, who is—

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

(ii) suffering from disease or ailment as specified in the rules made under section 80DDB,

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.

8) Tax deduction at source Under Section 194DA from non-exempt payment made under Life Insurance Policy (as per Finance Act, 2014):

Any sum paid from life insurance policy, including the sum allocated by way of bonus on such policy, which is not exempt under section 10(10D) of the Act is liable to TDS @2%. However if the aggregate amount paid during the financial year to the policyholder is less than Rs. One Lac, no tax is to be deducted. Recipient of payments referred to in section 194DA are eligible for filing self declaration in Form No. 15G/15H for non deduction of tax at source w.e.f. 1st June 2015.

(Republished with amendment- Source- LIC)

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14 responses to “Income Tax Benefits on Various Plans of LIC for FY 2015-16”

  1. narayandas purohit says:

    maine future generaly life insurance policy ke tahat 30000/- per year ke hisab se 5years tak kul 150000/- ka primium ka bhugatan kiya jiske liye muje meaturity per 153508/- ka bhugtan mila Aur us per mera TDS 1535/-kata gya hai kya yah sahi hai yadi han to muje is rasi mese kitani rasi aay me dikhani padegi

  2. Deepak Mahajan says:

    my client received rs. 664720 as return on investment of rs. 300000/- on bima nivesh 2005 scheme of LIC and LIC deducted Rs. 19294/- as TDS . now how should I proceed with this case? option 1: treat 664720/- as income and pay balance tax as self assessment tax or OPTION 2: TREAT THIS 664720/- AS TAx free and claim the TDS deducted..kindly help

  3. DEEPAK MAHAJAN says:

    my client received Rs 664720 as return on investment of Rs. 300000/- on BIMA NIVESH 2005 POLICY AND LIC DEDUCTED RS. 19294/- AS TDS U/S 194DA. NOW HOW CAN I PROCEED? IS THE 664720/- IS TAXABLE AND I HAVE TO PAY BALANCE AMOUNT OF TAX OR I TREAT THIS AMOUNT AS TAX FREE AND I CLAIM TDS REFUND? KINDLY HELP

  4. SIB SANKAR MONDAL says:

    SIR,
    HUSBEND & WIFE BOTH ARE SERVICE IN GOV.SEC.(NOT DEPENDENT)
    BOTH ARE TAKEN INDIVIDUAL LIFE INSURANCE.
    SO I WANT TO KNOW BOTH ARE ELIGIBLE FOR REBATE FROM BOTH INSURANCE PRM.

  5. Makhanlal Jhaver says:

    For Single Premium policy of high amount invested in ULIP policy where Death Benefit is only 1.25times of high premium , in case of maturityafter period of 10 years what amount will be taxable- Full maturity amount which may be much more higher than single premium amount or will it be treated as Long Term capital gain and not taxable at all… The Premium amount is not being claimed under section 80C .. It may also be case of Long Term Loss.. Pl clarify

  6. V.K.Khanna says:

    I have taken a New Jeevan suraksha policy and availing of tax benefits u/S 80 CCC. After subscr ibing to this policy for more than 9 years, now I want to wind up the same and receive whatever amount I have paid during the Currency of the policy. My question is that whatever amount I receive back after closing the the policy will it be taxable or not? In case it is exempt under which Section.?

  7. MAHESH P PATEL says:

    LIC PENSON INCOME TAXABLE OR EXEMTION ?

  8. chandresh shah says:

    Is tax implication on maturity of LIC’ BIMA BACHAT PLAN FOR 15 YEARS / BIMA NIVESH 10 YEARS ?

    IF YES , THEN IMPLICATION ON NORMAL I.T. RATES OR LONG TERM GAIN GAIN.

  9. Theerth says:

    Investment under long-term infrastructure bonds notified by the Central Government. (Sec. 80CCF)

    A deduction up to Rs. 20000/- is available to individuals and HUF for amount paid or deposited as subscription to long-term infrastructure bonds notified by the Central Government. This is in addition to Rs. ! lakh deduction available under section 80C.
    – is this section still valid in the Fiscal 2012. I remember reading through the news that this has been removed in this fiscal. please clarify!

  10. Barani says:

    Hi all.
    Is there an excemption on investemnt on Infra bonds u/s 80 CCF for this current year. Please clarify.

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