LIC Tax Benefits – Section 80C and 10(10D) Explained

LIC Tax Benefits – Complete Guide 2026

LIC policies offer excellent tax benefits under the Income Tax Act. Understanding these can significantly reduce your tax outgo while building wealth.

Section 80C – Premium Deduction

• LIC premiums are deductible under Section 80C
• Maximum deduction: ₹1,50,000 per year (combined with other 80C investments)
• Condition: Premium must not exceed 10% of Sum Assured
• Available for self, spouse, and children's policies

Section 10(10D) – Maturity Tax Exemption

• Maturity amount is fully tax-free under 10(10D)
• Condition: Sum assured ≥ 10× annual premium
• Includes bonus and Final Addition Bonus
• Death benefit is always 100% tax-free

Tax Saving Example

Annual LIC premium: ₹60,000. Tax slab: 20%. Tax saved: ₹12,000 per year under 80C. Over 20 years: Total tax saving = ₹2,40,000! Plus maturity amount of ₹20L is completely tax-free.

Section 80CCC – Pension Plans

Premium paid towards LIC pension plans (Jeevan Shanti, Saral Pension) qualifies for deduction under 80CCC — included within the ₹1.5L 80C limit.

HUF Benefits

A Hindu Undivided Family (HUF) can also invest in LIC policies for its members and claim 80C deduction in HUF's name — effectively doubling the tax benefit for families.

New Tax Regime Note

Under the new tax regime (April 2023+), 80C deductions are NOT available. However, 10(10D) maturity exemption still applies. Choose the old regime if you want 80C benefits on LIC premiums.