You will be aware of the tax exemption under the Income Tax rules on the payment of premiums for life and health insurance, but let us know that you can also get tax exemption in lieu of GST payment on premium. Its limits and conditions are fixed under the Income Tax rules. Health insurance premium attracts 18 per cent GST.
Also read: Know what is the income tax exemption, tax exemption and tax deduction while calculating tax.
If the premium of your policy is 21 thousand rupees, then you will have to pay 3960 rupees more according to 18 percent GST. In this way you will have to pay a total of Rs 24,960. Under the Income Tax rules, a total tax exemption of up to Rs 25 thousand can be taken on health insurance. In this way, you can get a total tax rebate of Rs 24,960.
How to estimate in term plan
Under the Income Tax Rules, you can get a total tax rebate of up to Rs 1.50 lakh on the premium for life insurance. However, tax exemption on GST payment varies according to the policy. The term plan charges 18 per cent GST. If you are 30 years old and take a term plan covering one crore rupees for 20 years, then its premium will be around nine thousand rupees. After adding 18 per cent GST to this, the total premium will be Rs 10,620. In this case, you can take a tax rebate of Rs 10,620.
Also read: You still have 50 types of tax rebates in the new income tax slab
Different rules in ulip
The premium of Unit Linked Plan (ULIP) linked to stock market is divided into two parts, investment in policy and investment in market. In this, GST is charged only with insurance cover premiums, management expenses and other charges. There is no GST on the investment portion in such a policy. The GST rate in ULIPs is 18 per cent.
Lower GST in traditional policy
In traditional life insurance, endowment plan, GST is charged at 25 per cent of the total premium of the first year and it is 4.5 per cent. After this, in the following years it attracts a GST of 12.5 per cent on the total premium. Ultimately, the average GST in traditional policies is 2.25 per cent.
Please provide information in the investment document
If you are employed, employers ask for proof of investment so that tax deduction (TDS) can be made at the source more or less than your salary. Normally in February, all employers ask their employees for this information through a form. In this case, while filling this document, assess the insurance premium and GST payment made on it and give details of it carefully.