I am an employee of PSU. I have purchased a JEEVAN SHANTI annuity single premium policy from LIFE INSURANCE CORPORATION OF INDIA ON 01/03/2021. Against the premium paid I have applied for tax exemption against LTC cash lump sum policy as announced by GOVERMENT OF INDIA for purchase of any item including insurance policy from the period of OCTOBER till 31/03/2021.
As per what I have read a single premium policy along with GST amount is eligible for tax exemption against LTC cash lump sump benefit. Can you throw some light regarding whether a single premium policy is applicable for getting Tax exemption benefit against LTC cash lump sum policy?
Ans: Premium on insurance policies attracts 18 per cent GST. Premium paid on new life insurance policies (issued between October 12, 2020 and March 31, 2021) is allowed as eligible services under the LTC Scheme.
Please note that GST is not charged on the entire premium (GST is charged on 10%of premium for single-premium policies, amounting to 1.8% GST on the entire premium). In this case even though premium attracts 18% GST, the effective claim of GST is only 1.8%.
It was clarified that policies purchased between 12.10.2020 to 31.03.2021 are eligible under the LTC Scheme. So as per this clarification, you can claim this insurance policy for deduction under LTC.