Employeeâs contribution â Section 80CCD (1) Allowed to an Individual who makes deposits to his/her Pension account. Maximum deduction allowed is 10% of salary (in case of taxpayer being an employee) or 10% of gross total income (in case of tax payer being self-employed) or Rs 1, 50,000 whichever less is.
This applies to current, former and retired employees. Premiums you pay for employees' group life insurance that is not group term insurance or optional dependent life insurance are also a taxable benefit.
However, if the life insurance death benefit is paid in installments instead of a lump sum, the interest portion (if any) is taxable. The principal is tax-free. The insurance proceeds may be included in the taxable estate of the owner. Not to worry, though...the estate tax exclusion is over $5.3 million.