What are the tax benefits available to NRIs on life insurance policies?
A. Following are the tax benefits available to NRIs whose income is assessed in India and who files an income tax return in India: Under section 10(10A): Any payment received in commutation of pension received from a pension fund set up by an insurance company is exempt from tax. Under section 10(10D): Any sums received under a life insurance policy are tax free. However in cases where the premium paid is in excess of 20% of the capital sum assured within a year, benefits paid excess of premiums will be taxable. The benefits from a key man Insurance policy and any sum received under Sec 80DD, Sub-section (3) are also taxable. Under section 80C: Premium paid towards a life insurance policy is eligible for deduction from the taxable income of the assessee. This is subject to the overall cap of Rs. 1 Lakh. Under section 80CC: Premiums paid towards pension funds is eligible for deduction from the taxable income of the assessee. This is subject to the overall cap of Rs. 1 Lakh.
