Is there any tax benefit on the premium I pay for my insurance policy
Deduction is available under Section 80C of Income Tax Act, 1961 for the premium paid on life insurance policies with a maximum annual ceiling of Rs. 1,50,000, irrespective of the Gross total income (subject to fulfillment of certain conditions).
After the maturity of my policies, will the maturity proceeds be taxable?
Under section 10(10D) of Income Tax Act, 1961 maturity benefits are tax free in the hands of policyholders if, at any point of time during the policy term, premiums paid in any year do not exceed 20%of the basic Sum Assured. For policies issued on or after 01st April 2012 premium should not exceed 10% of minimum sum assured at any point of time during the term of policy.
I pay the premium on policy for my wife/husband/child, can I claim Tax benefits?
Life insurance premium paid by you for your wife/husband/child's policy qualifies for a deduction under Section 80C of the Income Tax Act, 1961.
If I stop paying premiums on my life insurance or pension policies, can I claimTax Benefits?
If you stop premium payments of your policy, it amounts to discontinuation of the policy and no tax benefits are available in respect of such policy.
If I purchase a Unit Linked Insurance Plan (ULIP) and I choose to discontinue my policy, can I claim any tax benefits?
If you chose to discontinue a Unit Linked Insurance Plan before paying for 5 years from commencement of policy, you are not entitled to any tax benefits in the previous year in which the taxpayer terminates the plan. The quantum of deduction already taken in the preceding years would be deemed as the income of the taxpayer in the year in which policy is terminated.
What are the Tax benefits available on medical insurance premiums?
In computing the total income of an individual or HUF, deduction is allowed for any sum paid by any mode other than cash out of his income chargeable to tax
- to effect or to keep in force an insurance on the health of the individual, his or her spouse or dependent children or member of HUF, and
- to effect or to keep in force an insurance on the health of the parent or parents of the individual
Deduction amount - Up to Rs. 15,000 for self, spouse, children and Rs. 15,000 for parents. (Rs. 20,000 for parents if they are senior citizens). Assessee is allowed to make any payment on account of preventive health checkups upto Rs. 5,000 within prescribed overall limit.
Is Service Tax applicable on premiums paid on insurance products?
All premiums and charges are subject to service tax and cess (SBC and KKC) as per prevailing tax laws. Current Service Tax rates are as under:
- a) Traditional endowment/ annuity 3.750% on First year premium
- b) 1.875% on subsequent year premium and
- c) 1.50% in case of Single premium annuity Products.
- d) ULIP charges, Term, Health products & Riders, ST rate is 15%.
What are the Tax Benefits available on pension plans?
Under section 80CCC, you can avail benefit of up to Rs. 1.0 lakh on the premium paid towards a pension plan. On maturity, one-third of the maturity amount withdrawn is tax-free. Monthly pension receipts will be treated as income in the hands of the assessee and taxed accordingly.