Which Insurance premium can be claimed for tax relief.
How much premium is allowed for deduction under section under 80C
Any policy issued before 31/03/2012 including the day must have 5 time risk cover of the total annualised premium for claiming the whole premium for tax relief under section 80C. Policies which are issued on or after 01/04/2012 must have the 10 times risk cover of annualised premium to claim tax deduction on full premium. Same thing applies to the single premium policies. It should be kept in mind is that the risk cover is total death sum assured in the policy (Eg. Death sum assured in Jeevan Anand policy of LIC of India is 125% of basic sum assured).
If any policy which do not full fill this criteria then the tax deduction will be equal to eligible premium ie 20% ┬аof risk cover for policies issued on or before 31/03/2012 and 10% of risk cover is policy issued on or after 01/04/2012.
Example: If you have taken a policy of Sum assured Rs. 1000000 on 01/05/2012 and the total annualised premium is ┬аRs. 120000 then you can claim tax relief of Rs. 100000 only (10% of the sum assured), but if the same policy is taken on or before 31/03/2012 then relief can be claimed on whole premium amount as it is more the 20% ┬аof the sum assured in policy.
TDS on Insurance payments
There is no TDS deduction of a policy holder if all the payments from insurance products ┬аis less than Rs. 100000 in a financial year. Other wise TDS will be deducted @ 2% where PAN is available or @ 20% if PAN is not available.