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Monday, September 8, 2014

5 smart things to know about tax benefits on insurance policies

1.Section 10 (10D) of the Income Tax Act exempts the maturity proceeds received on an insurance policy from being taxed, provided certain conditions are fulfilled.

2.If the premium paid in any year exceeds 10% of the sum assured, the policy will not be eligible for exemption.

3.In case of single premium policies, where the premium paid exceeds 10% of the sum assured, the maturity proceeds are taxed in the year of receipt.

4.Key man insurance policies, irrespective of the premium as percentage of sum assured, are not eligible for the benefits of tax exemption.

5.If the sum assured becomes payable on a life insurance policy in the event of death, the proceeds are exempt from taxation in the hands of the payee.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

Source:-The Economic Times

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