Usually, tax advantages on life insurance coverage premium is out there beneath part 80C of the Earnings Tax Act. Nevertheless, the annual restrict of tax profit u/s 80C presently is Rs 1.5 lakh and other than life insurance coverage premium, the part accommodates many different investments/bills that accommodates fee of tuition payment for training of as much as two kids, reimbursement of dwelling mortgage principal, contribution to PF (worker’s contribution), ULIP, PPF and Sukanya Samriddhi Yojana Account, investments in ELSS, NSC, FD for five years or extra, and so on.
Because of the presence of so many elements, the annual 80C limt of Rs 1.5 lakh will get exhausted shortly and taxpayers couldn’t get advantages on many different tax-saving investments.
Nevertheless, because of restrictions in motion amid the Covid-19 pandemic this yr (FY 2020-21), the federal government has declared the LTC Scheme in lieu of the Go away Journey Concession that permits the salaried beneficiaries to assert tax advantages on bills made between October 12, 2020 to March 31, 2021 on buy of excellent and availing providers that entice GST price of 12 per cent or extra as a substitute of journey bills.
Profit on Life Insurance coverage
Among the many providers, life insurance coverage can also be included within the LTC Scheme. Nevertheless, in case the profit is already claimed on premium fee u/s 80C, it might’t be claimed beneath the LTC Scheme. So, in case your 80C restrict is exhausted, you should still declare advantages beneath the LTC Scheme. In any other case, it’s a must to select whether or not you wish to declare the profit u/s 80C or beneath the LTC Scheme.
Circumstances for Claiming Profit
Furthermore, the profit beneath the LTC Scheme will probably be allowed on premium paid for brand spanking new insurance policies issued between October 12, 2020 to March 31, 2021 solely and never on renewal premium. So, to avail the profit, it’s a must to buy a brand new life insurance coverage coverage – be it a time period plan or a ULIP or an annuity or an endowment plan.
Quantity of Profit
If you buy a single premium plan inside the eligibility interval, you’d get tax profit on the whole premium or your most LTC profit quantity, whichever is decrease. However for normal premium insurance policies issued in that interval, you’re going to get advantages on the quantity of premium paid until March 31, 2021, supplied the combination quantity is inside your LTC restrict.
The next desk reveals the quantity that will probably be thought of for calculation of LTC for various classes of insurance policies: