TAX BENEFITS UNDER

INSURANCE POLICIES

SUBMITTED TO:-

SEEMA KHANA MAM

SUBMITTED BY:-

KHUSHPREET KAUR

M.COM (SEM-3)

INTRODUCTION

There are two or more persons who are involved

in the insurance contracts like other commercial

contract. The person

involved in insurance contract are called insurer

& the insured. As the obligation of these persons

are different therefore, the provisions of income

tax are also different which are explained as

under:-

Taxation

insured insurer

individua

l

Business

organisatio

n

Life

insurer

General

insurer

Reinsurer

INCOME TAX FOR LIFE

INSURANCE

POLICYHOLDERSDeduction allowed from income for

payment of life insurance premium sec.

80 C :-Under section 80 C , a deduction of Rs 1,50,000 can be

claimed from your total income. In simple terms, you can

reduce upto Rs 1,50,000 from your total taxable income

through sec. 80 c. This deduction is allowed to an individual

or an HUF.

If you have paid excess taxes, but have invested in LIC,

PPF, Mediclaim etc, you can file your income tax return &

get a refund.

Deduction for premium paid for

annuity plan of LIC or other insurer

sec.80 ccc

This section provides a deduction to an

individual for any amount paid or deposited in

any annuity plan of LIC or any other insurer.

The plan must be for receiving a pension from

a fund referred to in section 10 (23 AAB).

If the annuity is surrendered before the date of

its maturity, the surrender value is taxable in

the year of receipt.

Deduction for premium paid for

medical insurance (sec. 80 D)

Deduction is available upto Rs 25,000 to a

taxpayer for insurance of self, spouse and

dependent children. If the individual or spouse

is more than 60 years old the deduction

available is Rs 30,000.

For uninsured super senior citizens (more than

80 years old) medical expenditure incurred

upto Rs 30,000 shall be allowed as a deduction

under section 80 D.

Deduction for contribution to

pension account (section 80 CCD)

Allowed to an individual who makes deposits

to his/her pension account. Maximum

deduction allowed is 10% of salary (in case

the taxpayer is an employee) or 10% of gross

total income (in case the taxpayer being self

employed) or 1,50,000 whichever is less.

From FY 2017-18 :- in case of self employed

individual, maximum deduction allowed is 20%

of gross salary instead of 10%.

Deduction for self contribution to

NPS section CCD (1B)

A new section 80 ccd (1b) has been

introduced for an additional deduction of upto

Rs 50,000 for the amount deposited by a

taxpayer to their NPS account.

Employers contribution to NPS section 80 ccd

(2) additional deduction is allowed for

employers contribution to employees pension

account of upto 10% of the salary of the

employee. There is no monetary ceiling on this

deduction.

Key man insurance section 37

(1)

The premium paid by the company is allowed

as a 100 % deductible business expenditure of

the income tax act. The proceeds received by

the company at the time of the maturity or

death of the key man is treated as income of

the company and will be subjected to the tax.

Sum received from life insurance

policy section 10(10D)

Any sum received under a life insurance

policy, including a sum allocated by the way of

bonus on such policy shall not be included in

the total income of person.

The exception is , however , not available in

respect of such policy which is specified under

sec. 80 DDA(3) or under a key man insurance

policy.

NON LIFE INSURANCE

POLICYHOLDERS

Medical insurance premium sec. 80 D :-

It provides hospitalization benefits. Under section 80

D of income tax act 2017, the premium paid for

mediclaim is eligible for tax deduction. Income tax

deduction is the complementary benefit that you can

avail when you are paying the premium of a

mediclaim policy. The policy can be in the name of :-

Your

Your spouse

Dependent children

Parents who are not dependent on you

THE TOTAL DEDUCTION THAT CAN BE

CLAIMED UNDER SECTION 80 D :-

Description medical premium tax

paid for,& maximum deduction

tax deduction u/s 80 D

self, spouse & parents

dependent (depen-

children dent or

not)

No one in the upto

family is a senior Rs 25,000 upto

Rs50,000

citizen Rs25,000

One or all your family upto upto Rs 55,000

(you, spouse or Rs 25, Rs 30,

Children) is a senior 000 000

citizen

If your parents (father, upto upto upto

Mother or both) are Rs 30, Rs 30, Rs 60,000

Senior citizen 000 000

Amount received from insurer

(section-45(1A))

Where any person receives at any time during

the previous year any money or other assets,

from insurer under a contract of insurer as a

result of demage to or destruction of any

capital asset caused by

a) Natural calamity such as flood, earthquake,

cyclone, etc

b) Civil disturbance or riots or

c) Enemy action (whether there is war or not)

Any profit or gain from receipt of such money or

Other assets, shall be chargeable to tax as

capital gain as income of the previous year in

which such amount or other asset is received.

INSURANCE PREMIUM {sec.

36(1)(i)The amount of any premium paid in respect of

insurance against risk of demage or

destruction of stocks or stores, used for

purpose of business or profession is allowed

as deduction.

Insurance premium paid by a

federal milk co-operative society

{sec.36(i)(ia)} Insurance premium paid by the federal milk co-

operative society on the lives of cattle, owned

by the members of a primary milk co-operative

society affiliated to it, is allowed as deduction.

Insurance premium on health of

employees under section 36(1)(ib)

A deduction can be claimed by a taxpayer if the following conditions are satisfied. The taxpayer pays premium to keep in force an insurance on the health of employees. The premium is paid by cheque. However, from the previous year 2007-08, such premium can be paid by any mode other than cash. Premium is paid under a scheme framed in this behalf by the general insurance corporation of india & approved by the central government(or with effect from the assesment year 2007-08,under a scheme approved by IRDA.

Income from other sources

sec.56(2)

Following gifts received by individual or HUF

are taxable

Gift of money gift of gift of movable

immovable property

property

Cash gift greater a)if received a)if received

than 50,000 is without without

Taxable consideration consideration

then stamp then fair

duty value> market value >

50,000 taxable 50,000 taxable

b)if received for b)if received for

inadequate consi- inadequate consi-

deration (stamp deration (fair

duty value- market value-

consideration)> consideration)>

50,000 taxable 50,000 taxable

(aggregate

Of all cash (aggregate of all gifts of

Gifts movable property to be

Received taken to calculated 50,000

In year to limit)

Be taken to

Calculated

50,000 limit)

Exceptions :-

Gifts from relatives

Gift received on occasion of marriage

Under will/ inheritance

Any trust

In contemplation of death (no will has been

prepared but a person is about to die & he

gives some amount to any person)

Any local authority

Any university / fund/ foundation/education/

hospital/ medical institution etc (sec.10(23c))

Tax deduction at source from

insurance commission (section

194D) The provision of section 194 D towards tax

deducted at source (TDS) from insurance

commission are given below :-

a)Who is the any person paying insurance

Taxpayer ? commission

b)Who is the at resident person

Recipient ?

c)Payment insurance commission

covered

d)At what time tax has at the time of payment

To be deducted at or at the time of credit,

Source whichever is earlier

e)Maximum amount if the amount of

Which can be paid payment is 20,000 or

Without tax deduction less than 20,000(15,000

from 1st june 2016)

f)Rate of tax deducted 10%+surcharge + educat-

At source ion cess,if the recipient

is resident non-

corporate assesse

20%+surcharge + educat-

ion cess,if the recipient is

resident corporate assesse

g) is it possible to get the recipient can make

the payment without tax an application in form

Deduction or with lower no. 13 to the assessing

Tax deduction officer to get a certifi-

cate of lower tax

deduction or no tax

deduction

THANK YOU