BANGALORE: Insurance Policies are the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force. Assesses can also avail of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise. There are many tax beneficiaries available along with these insurance policies.

Here are the five things you should know about the tax benefits available on insurance policies:

1. Section 10 (10D) exempts maturity

As per Section 10(10D) of the 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 whether received from India or any Foreign Company. It also exempts the maturity proceeds received on an insurance policy from being taxed, provided certain conditions are fulfilled.

2. Tax exemption eligibility

By any chance if the premium paid in any year exceeds 10 percent of the sum assured, then the policy will not be eligible for exemption.