Tax benefits


Life Insurance polices allows returns on investment but the mail purpose of insurance is for the cover against unfortunate eventuality that may arise. The cover might not benefit the person who passes away but guards his near and dear ones against the events that could affect them due to the unfortunate circumstance of the life assured’s demise.

INCOME-TAX RATES FOR ASSESSMENT YEAR 2011-2012 (FINANCIAL YEAR 2010-2011)



Premium Payments under the Life Insurance and Pension plans are eligible for tax exemption as per the Income Tax Act 1961:
-  Premiums paid under a life insurance policy are eligible for deduction under Section 80C* of the Act.
-  Contributions under pension plans are eligible for deduction under Section 80CCC* of
the Act.
-  The sum received (including the bonus) under a life insurance policy (other than any sum received under sub-section (3) of section 80DDA or under a Keyman insurance policy) are exempt under Section 10(10D) of the Act, subject to the provisions of the said section.

*As per the prevailing law, the aggregate amount of deduction under section 80C, 80CCC and section 80CCD shall not exceed one lakh rupees.


Exemption from the Life Insurance proceeds
Under Sec 10(10D) of IT Act 

-        Maturity benefits are tax-free in the hands of the policyholder if, at any point of time during the policy life, premiums paid within one year do not exceed 20% of the basic Sum Assured.
-        Death benefits are tax-free.
-        Please note that tax laws are subject to change and changes in tax laws could be with retrospective effect.
-        This information should not be construed as tax, legal or investment opinion from SBI Life Insurance Company Limited. SBI Life Insurance Company Limited is not responsible in any manner for decisions made on the basis of the above information.
-        Please consult your tax advisor in connection with your taxability.

 

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