Saving Schemes, Pension plans
Tax Benefits on Insurance and Pension
Tax Rates for Individuals
Explanation of Tax Benefits
Premiums paid for Life insurance - Deduction under Section 80C
Category of assesses allowed deduction: Individual assessee and Hindu Undivided Family assessee.
Eligible Savings: Premiums paid or deposited by assessee to effect or to keep in force insurance on the life of following persons:
Limit on amount of deduction: Deduction will be restricted to investments upto Rs 100,000 in savings specified under Section 80C (including life insurance premiums). If any investments have been made under Section 80CCC and 80CCD, then the qualifying amount under Section 80C will stand reduced to that extent.
Premiums paid for Pension plans - Section 80CCC
Permitted Deduction: Section 80CCC allows for deduction of premiums paid under a pension plan. As per this Section, premiums paid upto Rs 10,000 (till FY 2005-06) & Rs. 1 Lakh (from FY 2006-07) by an individual is allowed as deduction from his total income.
Deduction and upper limit: The qualifying amounts under Section 80D for self, spouse and dependent children is upto Rs. 15,000/- and additional deduction upto Rs. 15,000/- for the parents (from FY 2008-09 onwards). However, a higher amount of upto Rs 20,000/- is permitted if the person, for whose health insurance the premium was paid, was aged 65 years or more at any time during the financial year in which the premium was paid. Such amounts of premium paid would be allowed as deduction from the total income of the assessee.

Overall deduction limit - Section 80CCE

A new Section 80CCE has been inserted from FY2005-06. As per this section, the maximum amount of deduction that an assessee can claim under Sections 80C, 80CCC and 80CCD will be limited to Rs 100,000.
Benefits under insurance policy - Section 10(10D)
As per Section 10(10D) of Income tax Act, 1961, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax.However, this rule does not apply to following amounts:
sum received under Section 80DD(3), or
any sum received under a Keyman Insurance Policy, or
any sum received other than as death benefit under an insurance policy which has been issued on or after April 1 2003 and if the premium paid in any of the years during the term of the policy is more than 20% of the sum assured.

Tax Rates for Individuals
The rates of income-tax for FY 2008-09
Tax Rates for Individuals financial year 2008- 09
a. Tax rates
Tax rate for Individuals for Assessment year 2009-10 is as follows:

Income Range General Women Senior Citizens
Upto Rs. 150,000 Nil Nil Nil
Rs. 150,001 to Rs. 180,000 10% Nil Nil
Rs. 180,001 to Rs. 225,000 10% 10% Nil
Rs. 225,001 to Rs. 300,000 10% 10% 10%
Rs. 300,000 to Rs. 500,000 20% 20% 20%
Above Rs. 500,000 30% 30% 30%

No change in Surcharge and Education Cess which remain at 10% (where the total income is more than Rs. 10 lakhs) and Education Cess @ 3%
b. Increase in limits for deduction under Section 80D
At present premia paid under the policies on the health of the self, spouse, dependent children and dependent parents eligible for a deduction upto Rs.15,000/- per annum. For senior citizens, the limit is Rs.20,000/-
The following amendments have been proposed under Section 80D:
A deduction of Rs.15,000/- only for self, spouse and dependent children
Additional deduction of Rs. 15,000 for parent or parents
The condition of dependency of parent has been removed. In other words, even if the parent is independent, the individual can pay the premia and claim the deduction. This would help, for example, a wife to pay premia on a policy taken on the health of her father or mother who is independent