Broadly speaking, insurance plans (both general and non-general) are formulated taking into consideration the various tax-planning frame works. After all, insurance does act a tool for your tax planning as well. Consider these points for further understanding:
- The amount paid as premium towards a life insurance policy is allowed as a deduction under section 80C (for the financial year in which it is paid). This goes both for an individual or HUFs (Hindu Undivided Families).
- Under the same section 80C, the Service Tax levied (on the amount paid as premium towards life insurance) is also allowed as deduction.
- Under the Income Tax Act, the amount that is meant to be a receivable upon the policy/plan maturity is also allowed as deduction (Section 10D).
- Apart from life insurance, the general forms of insurance i.e. health insurance, car insurance, travel insurance etc. have respective tax beneficial terms and conditions. For instance, under section 80D, income tax deduction for payment of premium towards health insurance plan is allowed as deduction (Rs. 30,000 for senior citizens and Rs. 25,000 for Non-senior citizens). This too is meant for both â€“ the individual as well as for HUFs. Moreover, this covers the individual who pays the premium towards the rest of the family (e.g. for spouse or children).
- Section 80D allows tax deduction from the total taxable income for the payment of premiums towards medical insurance premium.
This deduction that is admissible under Section 80D is a sum of the payment of medical insurance premium by a person towards herself/himself, the spouse and the dependent children (Rs.25000) and if the person is a senior citizen, the deduction allowed is Rs.30000.
In case of premium payment for the sake of parents (dependent or not), the deduction allowed is Rs.25000. From 2018-19 onwards, the deduction allowed is Rs. 50000.
Additionally, there is income tax benefit on insurance premium for super-senior citizens as well. Super senior citizens are the citizens who are above the age of 80 years. Under the amendment in section 80D in Finance Act 2015, deduction under section 80D for all the medical expenses was allowed. Under the said amendment, the total deduction allowed for super senior citizens for payment of medical insurance premium and medical expenses was Rs. 30000 (which was increased to Rs. 50000 from the financial year 2018-19).
HDFC Life offers comprehensive benefits of insurance plans that are aimed at securing your financial independence at all times. For more details, kindly check the mentioned link:
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