LIC Smart Pension tax treatment

Tax treatment of Smart Pension

Identical tax treatment to Saral Pension (Plan 862): annuity income fully taxable as 'income from other sources' at marginal slab rate. Purchase price qualifies for §80CCC deduction (within the ₹1.5L §80C ceiling) in the year of payment only. Return of purchase price on death is taxable in the nominee's hands. No §10(10D) exemption for annuity income under any option.

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.