At the end of every financial year, most of us find ourselves planning our finances and browsing different options to save tax under various sections of Indian Income Tax Act. If you are also one of them and are looking for some tips to save your hard earned money, then we are here to help you. All you need to do to save your income tax is find the right investment option. Life insurance policies, for instance, are a great option to help you get tax exemption. Read on to find out tax benefits on Life Insurance Policies under Section 80C.
Apart from insurance cover, life insurance policies also offer tax benefits. Here are the deductions which you can avail on payment of life insurance premium:
Under Section 80C (along with deduction under Section 80CCC & 80CCD), overall deduction of up to Rs. 1,50,000 is allowed.
Tax Benefits On Life Insurance Policies Under Section 80C
- Deduction up to to 20% of the capital sum assured in policies availed on or before 31 March 2012 for premium paid towards life insurance policy in the name of self/spouse/child.
- Deduction of up to 10% of the capital sum assured in policies availed on or after 1 April 2012 for premium paid towards life insurance policy in the name of self/spouse/child.
- Deduction of up to 15% of the capital sum assured in policies availed on or after 1 April 2013 for premium paid towards life insurance policy in the name of any person suffering from disability or severe disability referred to in section 80U or suffering from disease or ailment as given in section 80DDB.
Minimum holding period
The minimum holding period for Life Insurance Policy under Section 80C is 2 years. If the policy is terminated before minimum holding period, then the deduction allowed in earlier years will be considered as income of the previous year of termination. Also, no deductions will be allowed for payment made towards such policy during the year of termination.
Also Read: Tax Benefits Of Health Insurance