LIC (Life Insurance Corporation of India) policies offer tax benefits under various sections of the Income Tax Act, which can help policyholders save tax. However, the tax benefits are subject to specific conditions and limits. Here are some of the common tax benefits that LIC policies can provide:

  1. Tax Deduction on Premiums Paid: The premiums paid for life insurance policies, including LIC policies, are eligible for tax deduction under Section 80C of the Income Tax Act. The maximum deduction allowed under this section is up to Rs. 1.5 lakh per financial year. This deduction is available for the policyholder, their spouse, or any child's policy. However, the premium should not exceed 10% of the sum assured for policies issued on or after April 1, 2012, to be eligible for the tax deduction.
  2. Tax-Free Maturity Proceeds: The maturity proceeds from LIC policies are generally tax-free under Section 10(10D) of the Income Tax Act. This means that any money received upon maturity of a life insurance policy, including the sum assured and any bonuses, is not subject to income tax, provided the premiums paid do not exceed the prescribed limits.
  3. Additional Deduction for Health Insurance: If the LIC policy includes a health insurance component (as a rider or as part of the policy), the premiums paid for health insurance are eligible for an additional tax deduction under Section 80D of the Income Tax Act, subject to certain limits.

It's important to note that tax laws are subject to change, and the above tax benefits may be revised in the future. Additionally, the eligibility for tax benefits may depend on the specific terms and conditions of the LIC policy, such as the sum assured, premium amount, and policy term.

To get precise information on the tax benefits applicable to a specific LIC policy and their impact on your tax-saving potential, it is advisable to consult with a tax professional or LIC representative who can provide personalized advice based on your financial situation and tax liabilities.

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