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Life Insurance Tax Benefits

Understand the life insurance tax exemptions under section 80C & section 10D of Income Tax Act 1961. Read this article to know more. Visit Now!<br>

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Life Insurance Tax Benefits

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  1. Life Insurance Tax Benefits

  2. Income Tax Benefit on Life Insurance - Section 80C and 10D Life insurance tax benefits are crucial for securing a stable financial future for your loved ones. These benefits provide capital support to ensure your family's well-being even in your absence. Under the Income Tax Act's Sections 80C and 10D, life insurance offers significant advantages. Section 80C permits deductions of up to ₹1.5 lakh on premiums paid towards life insurance policies.

  3. Additionally, Section 10(10D) allows tax-free income on maturity if the premium is below 10% of the sum assured or if the sum assured is at least 10 times the premium. However, if the sum assured falls short of being 10 times the premium, such as in the scenario where you pay ₹1 lakh for a sum assured of ₹5 lakh, the deduction on the premium is limited to 10% of the sum assured. In this case, the deduction would be ₹50,000 instead of ₹1 lakh.

  4. Furthermore, in the event of death, the sum assured paid to the nominee remains tax-free. Nevertheless, on maturity, if the policy does not meet the qualifying criteria for tax benefits, the income becomes subject to taxation at the marginal tax rate. According to Section 80C, premiums paid towards life insurance policies are eligible for tax deductions up to ₹1,50,000, provided that the premium amount does not exceed 20% of the sum assured. This rule applies specifically to life insurance policies issued before March 31, 2012.

  5. THANK YOU

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