Tax Saving Benefits

Income Tax Savings with LIC:

LIC Policy can be taken in the name of an individual or any member of Hindu Undivided family (HUF).  An Individual can claim exemption on LIC Premium paid on her/his life, his/her spouse, his/her children including adult children and married daughter(s).

Under Income Tax (IT) act, section 80C an amount of Rs.1 lakh is allowed as exemption on the total income n respect of investments made in LIC premium or other specified investments like NSC (Upto 1 lakh), PPF (Upto Rs.70,000). You can also invest maximum of 1 lakh under pension plans also which is under overall limit of Rs.1 lakh u/s 80C.

The total amount of deduction under all the relevant sections such as section 80C, section 80CCC and section 80CCD should not, exceed Rs.1 Lakh limit.

Under Section 80DD a deduction upto Rs.75,000/-  per annul is allowed from gross total income, when a contribution or deposit is made with the LIC for the maintenance of a handicaped dependent.

Any sum received under LIC policy including maturity bonus etc is non-taxable. Please check with your LIC Agent/ Income tax consultant for details as Income tax laws are subject to change.

From FY 2003-2004 premiums paid in excess of 20% of the Sum Assured will not be eligible for Tax free returns under section 10(10D) except in the case of death.

All the benefits payable under a Life Insurance policy are tax free. However in cases the premium paid in excess of 20% of the capital sum assured within a year, benefits paid excess of premiums will be taxable. The benefits from a keyman Insurance policy and any sum received under Sec 80DD, Sub-section (3) are taxable.

Deduction under section 80D
Medical Premium paid for a Health Insurance policy is deductible to the extent of Rs. 15000 for an assessee and/or his family members’ policy/s. A separate exemption to the extent of Rs. 15,000 for premiums paid for an  assessee’s parents is also available. If any one or both of the parents are Senior citizens, then an enhanced exemption limit of Rs. 20,000 is available.
Section 80D also covers payment of premium exclusively for Critical Illness Rider.

(A) Income Tax Table for Financial Year 2008-09:

I) For any individual other than referred to in Item no II and III below.

Total Income Range

Tax Rates

Surcharge Education Cess (% of I.T) Secondary and Higher Education Cess
Upto Rs.1,50,000/- Nil Nil Nil Nil
Rs.1,50,001-
Rs. 3,00,000
10% of the amount by which the total Income exceeds Rs.1,50,000 Nil 2% 1%
Rs.3,00,001-
Rs. 5,00,000
Rs.15,000 + 20%of amount by which the total Income exceeds Rs.3,00,000 Nil 2% 1%
Above Rs. 5,00,000 Rs.55,000 + 30% of amount by which the total Income exceeds Rs.5,00,000 Nil 2% 1%

(II) In case of resident women below 65 years of age.

Total Income Range

Tax Rates

Surcharge Education Cess (% of I.T) Secondary and Higher Education Cess
Upto Rs.1,80,000/- Nil Nil Nil Nil
Rs.1,80,001- Rs. 3,00,000 10% of the amount by which the total Income exceeds Rs. Rs.1,80,000 Nil 2% 1%
Rs.3,00,001- Rs. 5,00,000 Rs.12,000 + 20% of amount by which the total Income exceeds Rs.3,00,000 Nil 2% 1%
Above  Rs. 5,00,000 Rs.52,000 +30% of amount by which the total Income exceeds Rs.5,00,000 Nil 2% 1%

(III) In case of Senior citizens (above 65 years of age)

Total Income Range

Tax Rates

Surcharge Education Cess (% of I.T) Secondary and Higher Education Cess
Upto Rs.2,25,000/- Nil Nil Nil Nil
Rs.2,25,001- Rs. 3,00,000 10% of the amount by which the total Income exceeds Rs. Rs.2,25,000 Nil 2% 1%
Rs.3,00,001- Rs. 5,00,000 Rs.7,500 +20% of amount by which the total Income exceeds Rs.3,00,000 Nil 2% 1%
Above  Rs. 5,00,000 Rs.47,500 +30% of amount by which the total Income exceeds Rs.5,00,000 Nil 2% 1%

Please contact your Chartered Accountant/ Financial consultant for more details on Tax Savings and other Tax saving options.

Want to Save Tax?
Contact your nearest Life Insurance Of India (LIC) Branch/ LIC Agent. Or
Fill the Application form to apply online. (Mumbai only)

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Note:
The above is the TAX Savings summary giving the key features. This is for illustrative purpose only. This does not represent a contract and for details please refer to your policy document.

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