How Will Savings In a Life Insurance Plan Help Reduce My Tax Liability?

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• How Will Savings In a Life Insurance Plan Help
  Reduce My Tax Liability?

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Your savings in Life Insurance not only provide
protection to you and your family they also help
you reduce your tax liability. Tax Slabs This
explains how the various tax brackets work and
how much tax relief we are all eligible for. The
new tax structure was initiated on 1st April
2014. The present tax structure is as
follows Tax slabs for Financial Year 2014-2015
(Assessment Year 2015-2016)

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Surcharge on Income TaxFrom Financial Year
2013-14, Surcharge is applicable _at_ 10 on tax
payable in case of an individual if total income
exceeds Rs.1 Crore Education Cess Secondary
Higher Education Cess on Income TaxEducation
Cess _at_ 2 Secondary Higher Education cess _at_
1 will be payable on the amount of income tax.
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Service TaxAll premiums and charges are subject
to applicable taxes including service tax,
education cess and secondary higher education
cess as applicable under the prevailing tax
laws. With effect from April 1, 2012, Service Tax
Rate has been changed to 3.09 on first year
premium and 1.545 on subsequent year premium for
traditional endowment annuity A contract sold
by a life insurance company that provides fixed
or variable payments to a recipient, either
immediately or at a future date. products and
12.36 for ULIP, Term, Health products Riders.
In case of surrender of policies, service tax is
charged at 12.36. Life insurance policies can
be useful tax planning tools, because the policy
holder is eligible for tax benefits under the
Income Tax Act 1961 (Act). Though there are
multiple modes for saving tax, life insurance is
one of the most effective tax planning
instruments. Plans from Bajaj Allianz Life
Insurance can be used for protection, long term
savings and tax planning. There are two kinds of
income tax benefits available to individuals with
respect to long term savings being made in Life
Insurance policies
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? Deductions u/s 80C/80CCC ? Benefit is
available to Individual assessee and Hindu
Undivided Family assessee. o In case of
individual assessee Himself/herself, spouse,
children of such individual o In case of HUF
assessee any member of HUF ? If the amount of
premium paid in a financial year for a policy is
in excess of 20 of the actual capital sum
assured, then deduction will be allowed only for
premiums up to 20 of the sum assured. ? For
insurance policies issued on or after April 01
2012, deduction is allowed for only so much of
the premium payable as does not exceed 10 of the
actual capital sum assured. (15 of actual
capital sum assured in case of person with severe
disability or specified ailment).
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? Above benefits shall be reversed if the policy
is terminated/cease to be in force within 2 years
for traditional products and 5 years for ULIP
products after the date of commencement of
policy. ? Sec 80CCE Maximum amount of
deduction that an assessee can claim Notification
to an insurance company that payment of an amount
is due under the terms of the policy. under
Sections 80C, 80CCC will be limited to
Rs.150,000. ? Deductions u/s 80D Benefit is
available to Individual assessee and Hindu
Undivided Family assessee. In case of individual
assessee Himself/herself, spouse, dependent
children and parents of such individual In case
of HUF assessee any member of HUF
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? The qualifying amounts under Section 80D for
self, spouse and dependent children is upto Rs.
15,000/- and additional deduction upto Rs.
15,000/- for the parents. However, a higher
amount of upto Rs. 20,000/- is permitted for
parents, if they are senior citizens. Assessee is
allowed to make any payment on account of
preventive health checkups upto Rs. 5,000 within
prescribed overall limit. ? 80DD Premiums paid
for disabled dependent are eligible for deduction
up to Rs. 50,000 every year. A higher deduction
of Rs. 75,000 shall be allowed, where such
dependent is a person with severe disability. ?
Exemptions ? 10 (10D) Any sum received under a
life insurance policy, including the sum
allocated by way of bonus. Dividends paid to
shareholders from funds created out of additional
profits realised by the company. on such policy
will be exempt from tax. However, this rule does
not apply to following amounts
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? Sum received under Section 80DD(3), or ? A sum
received under a Keyman Insurance Policy,
or ? Any sum received other than as death
benefit under an insurance policy which has been
issued on or after April 1 2003 and if the
premium payable in any of the years during the
term of the policy does not exceed 20 of the sum
assured. For insurance policies issued on or
after April 01 2012, exemption would be available
for policies where the premium payable for any of
the years during the term of the policy does not
exceed 10 of the actual capital sum assured.
(For policies issued on or after 01 April 2013,
15 of actual capital sum assured in case of
person with severe disability or specified
ailment).
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Corp/life-insurance/life-insurance.jsp
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Thank You.!