Life Insurance Corporation of India (LIC) is the State-owned largest insurance policy provider - for life insurance, health insurance, pension plans or several other insurance and pension schemes. Lakhs of business class and working-class individual opt for LIC policies for a secured future. However, many LIC policyholders are not aware of tax benefits they can get on their LIC policies premiums.
Notably, several working-class individuals are liable to pay income tax from all sources. However, at present individuals (below 60 years) having income up to Rs 2.5 lakh is not liable to pay any taxes.
Meanwhile, individuals (60-80 years) with income up to Rs 3 lakh are liable for attractive tax benefits, while individuals (80 years of age) with Rs 5 lakh income can claim tax benefits.
Individuals who do not come under the above-mentioned category, have to pay a certain amount as a part of their tax payment to the Income Tax department. The amount depends upon the income class category individuals fall under.
Individuals are given tax benefits in the form of standard deductions and various investments. Well, indirectly insurance is also a type of investment among the most opted one.
Income Tax Slabs for Assessment Year 2019-2020 (PaisaBazaar):Resident Individuals & Non-Resident Indians & HUFs
|Income Threshold||Tax rate applicable|
|Up to ₹ 2,50,000||NIL|
|₹ 2,50,001 to ₹ 5,00,000||5% on income exceeding Rs. 2.5 lakh (max. Rs. 12,500)|
|₹ 5,00,001 to ₹ 10,00,000||20% on income exceeding Rs. 5 lakh (max. Rs. 1 lakh) + Rs. 12,500|
|Over ₹ 10,00,001||30% on income exceeding Rs. 10 lakh + Rs. 1 lakh + Rs. 12,500|
Here are some attractive tax benefits that LIC policyholders can claim on their LIC policies:
Deduction under section 80D:
Individuals or HUF (Hindu Undivided Family) can claim a deduction of Rs.25,000 under section 80D on insurance on the health of assessee or his family (i.e. Spouse & dependent children). An additional deduction up to Rs 25,000 for insurance of parents (less than 60 years of age) is available. If the parents are aged above 60, the deduction amount is Rs 50,000.
In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh.
Jeevan Aadhar Plan (Sec.80DD)
To claim this deduction a certificate of disability is required from a prescribed medical authority. Section 80DD deduction is available to a resident individual or a HUF on:
- Medical treatment expenditure or training and rehabilitation of handicapped dependent relative
- Payment or deposit to specified scheme for maintenance of handicapped dependent relative.
Where disability is 40% to 80%: Deduction from total income upto Rs.75000/- allowable on the amount deposited with LIC under Jeevan Aadhar
Where disability is above 80%: Deduction from total income upto Rs.1,25,000/is fixed on the amount deposited with LIC under Jeevan Vishwas
Deduction allowable from Income for payment of LIC Premium (Section 80C)
Section 80C is available for individuals and HUFs. Individuals claim a deduction of Rs 1.5 lakh your total income under section 80C. It can be reduce up to Rs 1,50,000 from your total taxable income.
Jeevan Nidhi Plan & Jeevan Suraksha Insurance Premium Plans (under section 80CCC)
Section 80 CCC provides a deduction to an individual for any amount paid or deposited from taxable income in the above annuity plans of LIC for receiving pension is allowed. It must be for receiving a pension from a fund referred to in Section 10(23AAB).
Jeevan Suraksha & Jeevan Nidhi Pension Plans
Any payment or deposit received by commutations of pension out of the Jeevan Suraksha & Jeevan Nidhi Annuity plans is exempt from tax, under Section 10(10A) (iii) of the Income-tax Act.