Normally, tax rewards on life insurance coverage premium is obtainable below section 80C of the Income Tax Act. However, the annual limit of tax advantage u/s 80C presently is Rs 1.5 lakh and apart from life insurance coverage premium, the section includes a lot of other investments/expenditures that includes payment of tuition charge for education of up to two young children, repayment of household loan principal, contribution to PF (employee’s contribution), ULIP, PPF and Sukanya Samriddhi Yojana Account, investments in ELSS, NSC, FD for 5 years or more, and so on.
80C Limit
Due to the presence of so a lot of elements, the annual 80C limt of Rs 1.5 lakh gets exhausted promptly and taxpayers couldn’t get rewards on a lot of other tax-saving investments.
LTC Scheme
However, due to restrictions in movement amid the Covid-19 pandemic this year (FY 2020-21), the government has declared the LTC Scheme in lieu of the Leave Travel Concession that enables the salaried beneficiaries to claim tax rewards on expenditures created in between October 12, 2020 to March 31, 2021 on obtain of excellent and availing services that attract GST price of 12 per cent or more as an alternative of travel expenditures.
Benefit on Life Insurance
Among the services, life insurance coverage is also incorporated in the LTC Scheme. However, in case the advantage is currently claimed on premium payment u/s 80C, it can not be claimed below the LTC Scheme. So, in case your 80C limit is exhausted, you may perhaps nevertheless claim rewards below the LTC Scheme. Otherwise, you have to select regardless of whether you want to claim the advantage u/s 80C or below the LTC Scheme.
Conditions for Claiming Benefit
Moreover, the advantage below the LTC Scheme will be permitted on premium paid for new policies issued in between October 12, 2020 to March 31, 2021 only and not on renewal premium. So, to avail the advantage, you have to obtain a new life insurance coverage policy – be it a term strategy or a ULIP or an annuity or an endowment strategy.
Amid dwindling interest prices, LIC of India launches new strategy with assured tax-free return
Amount of Benefit
If you obtain a single premium strategy inside the eligibility period, you would get tax advantage on the whole premium or your maximum LTC advantage quantity, whichever is decrease. But for common premium policies issued in that period, you will get rewards on the quantity of premium paid till March 31, 2021, supplied the aggregate quantity is inside your LTC limit.
The following table shows the quantity that will be regarded for calculation of LTC for distinctive categories of policies: