Tax Benefits on Insurance and Pension : Life insurance and retirement plans are effective ways of saving taxes. The tax breaks that are available under our various insurance and pension policies are described below:

• Our life insurance plans are eligible for deduction under Sec. 80C.
• Our Pension plans are eligible for a deduction under Sec. 80CCC.
• Our health insurance plans/riders are eligible for deduction under Sec. 80D.
• The proceeds or withdrawals of our life insurance policies are exempt under Sec 10(10D), subject to norms prescribed in that section.

• Surcharge on Income Tax:
  In case where the Total Income exceeds Rs 10,00,000, there would be a surcharge @ 10%.Marginal relief is available to assessee whose income just exceeds Rs. 10,00,000.
• Education Cess on Income Tax:
  Education Cess @2% will be payable on the amount of income tax (including surcharge).
• Premiums paid for Life insurance - Deduction under Section 80C.
• Category of assesses allowed deduction : Individual assessee and Hindu Undivided Family assessee.
• Eligible Savings : Premiums paid or deposited by assessee to effect or to keep in force insurance on the life of following persons:
  In case of individual assessee – Himself/Herself, spouse, children of such individual
  In case of HUF assessee – any member
• 20% limit : If the amount of premium paid in a financial year for a policy is in excess of 20% of the actual capital sum assured, then deduction will be allowed only for premiums upto 20% of the sum assured.
• Limit on amount of deduction : Deduction will be restricted to investments upto Rs 100,000 in savings specified under Section 80C (including life insurance premiums). If any investments have been made under Section 80CCC and 80CCD, then the qualifying amount under Section 80C will stand reduced to that extent.
• Premiums paid for Pension plans - Section 80CCC
  1 Permitted Deduction : Section 80CCC allows for deduction of premiums paid under a pension plan. As per this Section, premiums paid upto Rs 1,00,000 by an individual is allowed as deduction from his total income.
  2 Disallowance : This benefit will be reversed if the policy lapses / is cancelled.
  3 Limit : It may be noted that from FY2005-06, the limit of deduction under Section 80CCC will be part of the overall limit prescribed under Section 80CCE.
  4 Receipt under Policy : Amounts received on surrender (whole/part) of annuity plan, amounts received as Pension is taxed as income.
• Premiums paid for medical insurance - Section 80D
  1 Category of assesses allowed deduction : Individual assessee and Hindu Undivided Family assessee .
  2 Eligible premiums : Premiums paid by assessee by cheque out of his taxable income to effect or to keep in force an insurance on the health of following persons:
  In case of individual assessee – Himself/herself, spouse, dependant children and dependant parents.
  In case of HUF assessee – any member of HUF
  3 Deduction and upper limit : The qualifying amounts under Section 80D is upto Rs 10,000/-. However, a higher amount of upto Rs 15,000/- is permitted if the person, for whose health insurance the premium was paid, was aged 65 years or more at any time during the financial year in which the premium was paid. Such amounts of premium paid would be allowed as deduction from the total income of the assessee.
  Overall deduction limit - Section 80CCE
  A new Section 80CCE has been inserted from FY2005-06. As per this section, the maximum amount of deduction that an assessee can claim under Sections 80C, 80CCC and 80CCD will be limited to Rs 100,000.
  Benefits under insurance policy - Section 10(10D)
  As per Section 10(10D) of Income tax Act, 1961, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax.
  However, this rule does not apply to following amounts: sum received under Section 80DD(3), or any sum received under a Keyman Insurance Policy, or any sum received other than as death benefit under an insurance policy which has been issued on or after April 1 2003 and if the premium paid in any of the years during the term of the policy is more than 20% of the sum assured.
• Rebate in respect of Securities Transaction Tax (STT) paid
  1 Section 88E has been introduced by Finance Act (No 2) of 2004.
  2 As per the provisions, where total income of an assessee includes any income under the head ‘Profits and Gains from Business or Profession’ arising from taxable securities transactions, he shall be entitled to a rebate from the income tax on such income.
  3 Amount of rebate : Amount of STT paid in respect of taxable securities transactions entered into in the course of business during that previous year.
  4 The deduction will be allowed if proof of payment of STT is furnished alongwith the return. The proof has to be furnished as per the format prescribed by Income Tax.
  5 Maximum deduction shall be equal to the amount of income tax on above income.

Note: The above information is to give a general overview of some aspects of the tax laws as prevailing currently (as of end Jan 2006), and is not and neither intended to be a tax advice. The above information is subject to change with the change in tax laws. Company is not liable to inform change in the above to any person. The above provisions may apply differently as per the specific situation of a person.