LIC Single Premium Endowment tax treatment

Tax treatment of Single Premium Endowment

The single premium qualifies for §80C up to ₹1.5L in the year of payment — a meaningful constraint, since deploying a ₹10L lump sum saves tax on only the first ₹1.5L of premium. Maturity proceeds are tax-free under §10(10D) provided SA ≥ 10× single premium; for Plan 717 at the 15-year specimen tariff (₹669/1000 SA), the SA is only ~1.5× the single premium, so the 10× condition is not met and maturity is taxable as 'income from other sources' at slab rate. This is the single most important caveat for Plan 717: unlike annual-pay endowments, single-premium endowments routinely fail the 10(10D) condition. Death benefits remain tax-free under §10(10D) without conditions. From 22 September 2025, individual life insurance premiums attract 0% GST — single-premium plans benefit fully from this since the entire premium is paid upfront and was previously taxed at 4.5% in year 1.

The 10× sum assured rule

For policies issued after 1 April 2012, both §80C deduction on premiums and §10(10D) exemption on maturity require the sum assured to be at least 10× the annual premium. Jeevan Labh's standard premium tables comfortably meet this — only watch out at very high entry ages where premium-to-SA ratios compress.

What changes from FY 2023-24

For non-ULIP life insurance policies issued on or after 1 April 2023 with annual premium above ₹5 lakh, maturity proceeds become taxable. Jeevan Labh premiums for typical sum-assured ranges (₹2 L–₹20 L) sit well below that threshold, so this rule rarely bites — but worth confirming for high-SA policies.