Section 10(10A)
Any payment received by commuting the pension received by an individual out of an Annuity plan of LIC from a fund set up by that corporation is wholly exempt from income tax.

Section 10(10D)
Any sum (including bonus) received from a life insurance policy is entirely tax-free. However, the Keyman insurance policy does not enjoy this exemption. [Section 10D]

Contributions to pension funds - Jeevan Suraksha
Section 80CCC provides that the amount paid or deposited by an individual in any annuity plan of the Life Insurance Corporation of India shall be allowed as a deduction from taxable income. This deduction will be restricted to Rs.10,000/-.

1. If the assessee or his nominee surrenders the annuity before its maturity date, the surrender value shall be taxable in the hands of the assessee/nominee (as the case may be) in the year of receipt.
2. Any amount received by the assessee or his nominee as pension, will be taxable in their hands (respectively) in the year of receipt.
3. If you are claiming a deduction under section 80CCC, then the amount deposited in the annuity plan will not qualify for rebate under section 88 also (however you have the option of not claiming the 80CCC deduction and including such investment for the section 88 rebate).
   
   
   

Under Section 80DD, if an individual or member of a HUF, goes in for the 'Jeevan Adhar' policy (approved for this purpose by the Central Board of Direct Taxes - CBDT) towards maintenance of a handicapped dependent, they will be permitted to deduct Rs.40,000/- from their income.

1. The taxpayer has to be an Indian Resident.
2. The deposit has to be made from income chargeable to tax.
3. For the purpose of this section, a 'handicapped dependent' is a person who satisfies the following points.
   1. He is a relative (husband, wife, brother or sister or any lineal ascendant or descendant) of the individual or, is a member of a HUF and is not dependent on any person other than such individual or HUF for his support or maintenance.
   2. He is suffering from a permanent physical disability (including blindness) or is subject to mental retardation, being a permanent physical disability or mental retardation specified in the rules made by the CBDT for the purpose of this section.
   3. A physician, a surgeon, an oculist or a psychiatrist working at a Government hospital should certify the permanent physical disability. d. This permanent physical disability has the effect of reducing considerably the person's capacity for normal work or engaging in any profession or occupation.
4. The insurance scheme is such that the assessee can appoint either the handicapped dependent or any other person or a trust to receive the payment on his behalf, for the benefit of the handicapped dependent.
5. If the handicapped dependent predeceases the individual or member of the HUF referred to above, an amount equal to the amount deposited shall be deemed to be the income of the assessee in the year ('previous year') in which such amount is received and such amount will be taxable income.
   
   

Rebate under Section 88
The following contributions should be taken into account for arriving at the gross qualifying amount to calculate the rebate under Section 88.

• Life insurance premium paid by a person to effect or keep in force an insurance (life or endowment) policy. Payment made by Government employees to the Central Government Employees' Insurance Scheme is also included for this purpose.
• Contribution made by an individual to participate in the unit linked insurance plan of LIC - Dhanraksha Plan.
• Premium contribution to effect or keep in force a contract for a notified annuity plan.
• Jeevan Dhara, Jeevan Akshay (both schemes withdrawn with effect from 1st July 2000). Repayment of an amount borrowed by the assessee from the Life Insurance Corporation of India, subject to a maximum of Rs.20,000.

20% of the aggregate of the above contributions (among others), subject to a maximum of Rs.12,000, will be the amount of rebate allowed on the tax payable. This implies that a contribution of up to Rs.60,000/- in the above-mentioned investments will yield optimum benefit; any more investment will not entitle you to a further rebate.

However, if 25% or more of income derived, is from any of the following professions, it entitles you to an enhanced rebate of 25% on the aggregate contributions subject to a limit of Rs.15,250/-. This implies that the contribution to above investments that will yield maximum benefit is Rs.61,000/-.

You are entitled for this additional benefit if you are an

• Author
• Playwright
• Artist
• Musician
• Actor
• Sportsman

1. The premium/contribution paid will qualify for the rebate provided the insurance policy is taken on the life of the following persons:
   1. In the case of an individual, such individual, the spouse and any child of such individual.
   2. In the case of a HUF, any member of the HUF.
      
2. The aforesaid payments/investments should be made out of income chargeable to tax. Further, unless these payments/deposits are actually made during the relevant year, they will not qualify to form part of the rebate calculation.
3. If a member participating in a unit linked insurance scheme terminates his participation before making a contribution for a period of five years, no tax deduction is allowed in the year in which he terminates his participation. Moreover, an amount equal to an aggregate of the tax deductions allowed in previous years (on earlier contributions made to such plan), shall be deemed to be tax payable in the year in which he terminates his participation in the plan.
4. If a person discontinues a Life Insurance policy before two years' premium is fully paid, no tax deduction will be allowed on the premium paid in the year of such discontinuance. Further, the amount of tax reduction allowed in respect of such premium in the previous year shall also be deemed to be tax payable by the assessee in the year in which the policy is terminated.
5. In the case of a single premium policy, if such policy is surrendered within two years of the date of commencement of insurance, the tax deduction allowed earlier shall be deemed to be tax payable in the year of surrender.