Usually, tax advantages on life insurance coverage premium is offered below part 80C of the Revenue Tax Act. Nevertheless, the annual restrict of tax profit u/s 80C presently is Rs 1.5 lakh and aside from life insurance coverage premium, the part accommodates many different investments/bills that accommodates cost of tuition charge for schooling of as much as two kids, compensation 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 forth.

80C Restrict

As a result of presence of so many elements, the annual 80C limt of Rs 1.5 lakh will get exhausted rapidly and taxpayers couldn’t get advantages on many different tax-saving investments.

LTC Scheme

Nevertheless, resulting from 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 enables the salaried beneficiaries to say tax advantages on bills made between October 12, 2020 to March 31, 2021 on buy of excellent and availing companies that appeal to GST charge of 12 per cent or extra as a substitute of journey bills.

Profit on Life Insurance coverage

Among the many companies, life insurance coverage can also be included within the LTC Scheme. Nevertheless, in case the profit is already claimed on premium cost u/s 80C, it could possibly’t be claimed below the LTC Scheme. So, in case your 80C restrict is exhausted, you should still declare advantages below the LTC Scheme. In any other case, it’s important to select whether or not you need to declare the profit u/s 80C or below the LTC Scheme.

Circumstances for Claiming Profit

Furthermore, the profit below the LTC Scheme will likely 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 important 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.

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Quantity of Profit

If you are going to buy a single premium plan inside the eligibility interval, you’d get tax profit on your entire premium or your most LTC profit quantity, whichever is decrease. However for normal premium insurance policies issued in that interval, you’ll get advantages on the quantity of premium paid until March 31, 2021, supplied the combination quantity is inside your LTC restrict.

The next desk exhibits the quantity that will likely be thought-about for calculation of LTC for various classes of insurance policies:

* GST will not be collected individually, premium is inclusive of costs and GST.