How to show Term Insurance in ITR 2026

The 2026 Tax Filing Shift

Filing your taxes in 2026 feels different. You probably noticed your term insurance premium dropped recently. The government finally scrapped the 18% GST on term insurance. This is great for your wallet. But it changes how you report numbers in your ITR. Most young professionals are now automatically placed in the New Tax Regime. If you stay there, you cannot claim the Section 80C deduction for your life insurance. It is a straight trade-off. You get lower tax rates but lose the 80C and 80D benefits. Check your Form 16 early. If your employer has already deducted tax based on the New Regime, you must decide if switching back to the Old Regime during filing actually saves you more money.

The GST Split and Your Premium Certificate

Tax year 2025-2026 saw a major change in GST rules. If you paid your annual premium before the GST removal took effect in late 2025, your receipt includes 18% tax. If you paid after, it is 0%. Do not guess these numbers. Log into your insurer's portal right now. Download the Annual Premium Certificate for FY 2025-26. This document is your only source of truth. It clearly separates the base premium from the GST. When filling out your ITR, you only claim the base premium plus any applicable GST paid. For those in the Old Tax Regime, this total goes into the Section 80C bucket. The limit remains ₹1.5 lakh. If you have EPF, ELSS, and home loan principal, your term insurance might already be hitting that ceiling.

Mapping Riders to Section 80D

Many people make a huge mistake here. They lump the entire premium into Section 80C. Do not do that. If you added a Critical Illness rider or a Surgical Care rider to your term plan, that portion of the premium qualifies under Section 80D, not 80C. This is a separate limit of ₹25,000 for yourself and your family. Look at your premium break-up. If your base term cover costs ₹12,000 and your Critical Illness rider costs ₹3,000, you enter ₹12,000 under 80C and ₹3,000 under 80D. This small step can maximize your savings if your 80C is already full. It is a clean way to use every tax break available. You can use tools at OneAssure to understand how different riders impact your overall protection and tax eligibility.

Checking Your AIS and Form 26AS

The Income Tax department knows what you paid. Your insurer reports your premium payments directly to the tax authorities. Before you type a single digit into the ITR-1 Sahaj form, open your Annual Information Statement (AIS) on the tax portal. If your AIS shows a premium of ₹14,500 but you try to claim ₹16,000 because you forgot about the GST removal, you will trigger a mismatch notice. It happens fast. The system is automated now. Ensure the amount on your premium certificate matches the AIS. If there is a discrepancy, contact your insurance company to rectify it before filing. Accuracy is your best defense against tax notices.

The 10% Rule and Death Benefits

There is a hidden clause that often trips up policyholders. To claim a deduction under Section 80C, your annual premium must not exceed 10% of the Sum Assured. If you have a ₹1 Crore cover and pay ₹15,000, you are safe. That is only 0.15%. However, if you bought a small policy with a high premium for some reason, and the premium is 12% of the cover, your deduction is capped at 10% of the sum assured. On the flip side, the death benefit is a different story. Under Section 10(10D), the money your family receives if you are no longer around is completely tax-free. This remains true even if you choose the New Tax Regime. The government does not tax the safety net you leave for your loved ones.

Common Filing Errors to Avoid

Do not claim premiums paid for your parents or siblings under Section 80C. The law is very specific. You can only claim for yourself, your spouse, and your dependent children. Even if you are the one paying the cheque for your brother's term plan, you get zero tax benefit for it. Another common slip-up is reporting maturity proceeds. While most term insurance does not have maturity value, some 'Return of Premium' plans do. If you get your premiums back, you must report this under the 'Exempt Income' schedule in your ITR. It is not taxable, but failing to declare it can lead to unnecessary questions later. Keep it simple. Follow the documents. File early.