Section 10(10D) of ITR, 1961

Under Section 10(D) of the Income Tax Act of 1961, an individual can avail of tax deductions on the total sum assured, which is the maturity and death benefit, and the accrued premium generated from the claims of life insurance plans. This exemption is applicable to numerous life insurance plans. Additionally, payments from Unit Linked Life Insurance plans whose total premium payable amount does not exceed Rs. 2.5 lakh in a financial year at maturity or at the time of partial withdrawal are eligible for tax exemptions under this section.

Some of the exemptions listed in Section 10(10D) of the Income Tax Act of 1961 are as follows.

• Tax Rebate on Life Insurance Policy

1. If the amount of premium that is paid within a year during the policy tenure for the policies bought between 1st April 2003 to 31st March 2012 does not exceed 20% of the sum assured is eligible for tax exemption.
2. The premium payment amount should not exceed 10% of the sum assured if the insurance policy is bought after April 1, 2012.
3. The exemption on the life insurance plan bought before 1st April 2013 should not be more than 15% of the sum assured if the insured is severely disabled or suffering from illness.
4. Some of the disabilities including mental retardation, autism, and more are not included under Section 80U of the act.
5. The conditions that qualify for this exemption are listed in section 80DDB of the Act.

• TDS on a Life Insurance Policy

TDS at 1% will be deducted by the insurer since October 2014 before making the payment in case the benefit received from life insurance is greater than Rs. 1,00,000 are not eligible for the tax exemptions under Section 10(10D). Furthermore, TDS is deducted from bonus amounts. However, no TDS is taken into account if the amount raised is less than Rs. 1,00,000. Despite the fact that the amount received is completely taxable, one might claim credit for TDS by e-filing an income tax return.

• Tax Liability of Single Premium Insurance Plan

According to Section 10(10D) of the Income Tax Act, the maturity amount received through a single premium insurance policy is not eligible for a tax deduction. However, the maturity benefit can only be tax-free in case the minimum sum assured of a single premium insurance plan is ten times the amount paid for the duration of the policy.

Listed below are the terms and conditions that must be fulfilled by the maturity payout to receive tax savings benefits under Section 10(10D):

• Benefit must be compensated upon death
• The received benefit must not be availed of through the policy issued under Section 80DD (3) of the Income Tax Act, 1961.
• The payout must have not been received under Keyman Insurance Policy.
• A pension or annuity payout cannot be included.
• Benefits are not availed under a group insurance plan sponsored by the employer.
• The policies that are bought between 1 April 2003 to 30 April 2012 cannot pay the annual insurance premium of more than 20% of the sum assured.
• If the policy is bought after April 30, 2012, the premium cannot exceed 10% of the insured amount.