In view of the pandemic, this year besides 80C cover, life insurance premium also enjoys tax benefit as part of the LTC scheme. This is as this year or precisely the year 2020 saw restriction in travel due to the Covid 19 pandemic. Also, this comes as a benefit as 80C section of the Income-tax Act comprises investments such as NSC, Sukanya Samriddhi, PPF, tuition fees etc. and the limit of Rs. 1.5 lakh gets exhausted fast.
Now in the LTC scheme, the government has extended salaried class with the advantage that they can claim for expenses made between October 12, 2020 to March 31, 2021 on purchase of good and availing services that attract GST rate of 12 per cent or more instead of travel expenses.
Insurance scheme also included in LTC scheme
Insurance premium payment for life coverage is also included under the LTC but the same premium payment cannot be claimed for tax advantage if the same is claimed as deduction under Section 80C.
When can you claim Life insurance premium under LTC scheme?
Premium payment can be claimed for tax benefit if it is a new policy issuance between October 12, 2020 to March 31, 2021 only and not on renewal premium. And the advantage is available on term plan or a ULIP or an annuity or an endowment plan.
Benefit available in lieu of new life insurance premium under LTC scheme
For a single premium plan i.e. for the policy purchased during the eligibility period, you would get tax benefit on the whole premium amount or maximum LTC benefit amount available to you, whichever is lower. But for regular premium policies issued in that period, you will get benefits on the amount of premium paid till March 31, 2021, provided the aggregate amount is within your LTC limit.