10 Must Know Things on Taxability of Insurance Policies

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Life Insurance In India
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10 Must Know Things on Taxability of Insurance
Policies
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With awareness of having insurance policies, most
of us at least have one policy or at least
planning to have to safeguard the family after
you. The importance of having policy also
increases due to tax benefit on it. There is a
general perception that all premiums paid for
Life Insurance are eligible for deduction under
80C subject to overall Limit of 1.50 Lac. Most
of them also assume that maturity amount is
exempted under section 10(10D). Recently, the
cabinet approved the Finance Bill 2014 ensuring
management control in the hands of Indian
enterprise in the insurance sector.
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• With new Finance Bill, it was announced that a
  Tax Deducted at Source (TDS) will be applicable
  for insurance plans on maturity.
• 2) The premium paid for life insurance policy
  qualifies for a tax benefit up to Rs. 1.5 lakh
  under section 80C.
• 3) If premium paid in a financial year is in
  excess of 10 per cent of the sum assured then tax
  is deducted on the premium amount up to 10 per
  cent of the sum assured.
• 4) As per section 10 (10D) death benefit of an
  insurance policy is tax exempted.
• 5) Benefits like maturity benefits is exempted
  from tax if the premium paid does not exceed 10
  per cent of the sum assured.

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6) Earlier, premium limit for tax benefits was
fixed at 20 per cent of the sum assured. To
increase the insurance element, the Finance
Minister has changed the limit to 10 per cent.
7) Please note that Life Insurance in India
premium paid for your parents, Brother, Sisters
or your in-laws are not eligible for deduction
under section 80C.
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8)All premium can be included, cases where you
are paying premium for more than one insurance
policy. 9) Pension Plans which are approved by
IRDA, the commuted Pension received from such
Pension fund will be tax-free. 10) Do not
forget all premiums and charges are subject to
taxes which includes service tax, education cess
and more depending on that particular tax
period. Source http//www.goodreturns.in/person
al-finance/insurance/2015/03/10-must-know-things-o
n-taxability-insurance-policies-343550.html
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