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Tax essentials · India

Life insurance taxation

Understand the tax treatment before choosing a product or taking a payout.

Premium deductions

Eligible life-insurance premiums can qualify within the shared ₹1.5 lakh deduction ceiling under the old regime. Policy conditions and premium-to-cover limits apply; this is not a separate allowance for each policy.

Maturity and death benefits

Maturity proceeds are not automatically tax-free. Issue date, premium limits and other exemption conditions matter. For non-ULIP policies issued on or after 1 April 2023, the ₹5 lakh annual-premium threshold and aggregation rules apply. Death benefits generally have separate exemption protection, subject to statutory exceptions.

ULIPs and pension plans

ULIPs have separate exemption rules; taxable ULIP proceeds are treated as capital gains. Check pension and annuity payout treatment separately rather than assuming the whole payout is exempt.

Educational summary for individual investors, not a personal tax calculation. Applicable surcharge and cess are additional where relevant. Confirm the applicable tax year, residency and current law with a tax professional. Sources reviewed 12 September 2026; linked guidance may use Income-tax Act, 1961 section references.

Official references: Income Tax Department: life policies · Deduction guidance · Old versus new regime

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