Life Insurance policy
It was time when there were few people who were used to invest their money in Life insurance policy and that too very little amount. Therefore, Government of India in order to promote more household investments in life insurance policies introduces certain exemptions and deductions which an assessee can easily avail.
Life insurance policy is that policy which are taken on life of an individual in return of payment of annual premium amount and after maturity a cumulative amount is been paid to the policy holder. So we can see that there are two types of payment involved in this policy
- First, Annual premium Amount.
- Second, Maturity amount.
As per income tax act 1961, Any amount which is been paid by an individual as a premium on account of life insurance policy taken on himself or of his spouse or children shall be allowed as a part of deduction U/s 80C .
It means an assessee can avail maximum benefit of Rs. 1,50,000 from amount of Life Insurance premium.
Secondly As per Section 10 (10D) , any amount received on account of life insurance policy shall be exempt. However such insurance policy doesn’t include “KEY MAN INSURANCE POLICY” .
It means if one can see as a part of investment, life insurance policy is one of the best which one can avail not only on Tax benefit but also a part of life saver.
Note:- Key Man Insurance Policy is that policy which is been taken by a business entity on its Key Managerial person. This policy is generally taken for benefit of business and therefore maturity amount of this policy is taxable.
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