In order to incentivize insurance cover and investment/savings amongst masses, government of India offers tax rebates on many insurance policy premiums. Within the prescribed limits, your premium payment becomes non-taxable and your annual income is adjusted by the that amount to calculate the taxable income and your tax liability. Such insurance premium is said to be tax-deductible

Under the Indian Income Tax Act of 1961, several sections are attributed to defining the scope and extent of income tax rebates on various insurance policies, and other investment avenues. Here we will list all investment avenues that allow for tax rebate. However, details and examples will be for insurance-based options only.

Section Who can take the benefit Scheme Categories eligible for tax deduction Scheme Types eligible for tax deduction Tax Rebate on Tax Rebate Amount
Section 80C An individual or HUF (Hindu Undivided Family) Investment Schemes ULIPs, ELSS (Equity Linked Savings Scheme)
Section 80 CCC* Insurance Schemes Life Insurance Premium of Life insurance for self, spouse, or childrenUp to INR 1,50,000 for all kinds of investments mentioned under Section 80C cumulatively.
Section 80 CCD Retirement Savings Schemes Public Provident Fund (PPF), National Pension Scheme (NPS), Employee Provident Fund (EPF)
Fixed Income Schemes Sr Citizen Saving Scheme (SCSS), National Saving Certificate (NSC), Sukanya Samridhi Yojana, Home Loan Repayment, Tuition Fees Payment
Section 80D An individual or HUF (Hindu Undivided Family) Preventive Health Checkup, Health Insurance (self and family), and other medical expenses Up to INR 60,000

*Section 80CCC- Insurance Premium
The premium paid towards the life insurance policy for self, spouse or children (up to the limit of INR1,50,000 across all investments under Section 80C) subject to the condition that the premium paid should not be higher than 10% of the sum assured, is applicable for tax exemption under Section 80C of Income Tax Act.

Section 80CCC also offers a tax deduction to individuals on any amount deposited and paid in any annuity plan of any registered insurance company. The pension received under the annuity plan or the amount received in case of surrendering the annuity plan, including the bonus accrued and the interest on the annuity, are taxable in the year of receipt.

Also returns on life insurance (if accrued and received), including UPLIPs, are applicable for tax exemption under Sec 10D of the Income Tax Act

Only the premium paid in a particular financial year can be considered tax deductible in that particular year.

Deductions claimed in previous years become taxable in the event of the policy getting terminated due to any reason like non-payment of premium for more than 2 years in case of regular premium plans. In case of single premium plans, it happens if the policy in terminated vide a notice in two years since the date of commencement of the policy.

Section 80D of the Income Tax Act of 1961, offers a deduction on health insurance policies which is additional to the INR 150,000 exemption provided under Section 80 C and explained above.

Individuals can avail this benefit for policies paid for self, spouse and/or children. In case of HUF, it’s applicable for the entire family.

As per Section 80D, premium paid for health insurance policies (individual as well as family-floater plans) is exempt from tax deduction. The extent of this benefit is INR 25,000 in the year, unless the policyholder is a senior citizen. In such cases, the exemption limit is INR 50,000. However, this is subject to rules. Please see the table below.

Scenario Health insurance policy for Total permissible tax exemption for premium up to
One or more of Self, spouse and dependent children Parents (whether dependent or not)
All insured are under 60 years of age INR 15,000 INR 15,000 INR 30,000
Asessee (who is liable for tax) and direct family (spouse and children) are under 60 years of age, and parents are above 60 INR 15,000 INR 20,000 INR 35,000
Assessee as well as parents are above 60 INR 20,000 INR 20,000 INR 40,000