Protect Yourself and Save Tax

Buying insurance is always about “life benefits”. It should never be about tax benefits alone. The basic purpose of buying insurance is to protect the interests of your most value asset, which is none other than your family, so that they can lead a happy, comfortable and safe life. And, of course, there are tax saving plans that offer the additional benefit of tax exemptions, helping you save even more for your allied investments.

 

Be it life insurance, vehicle or health insurance, the Income Tax Act of 1961 guarantees exemptions and deductions for your benefit. These exemptions and deductions are provided as per the terms and conditions laid out by specific sections of the Income Tax Act. We take a look at the various tax advantages promised by tax saving plans.

Tax Advantages Proposed by the Income Tax Act

Tax advantages provided by insurance plans include:

1. Deductions under section 80C: Deductions can amount to a maximum of 1,50,000 INR under this section and would be applicable for life insurance premiums only, which is restricted to a sum of 10% of the sum assured. However, the tax benefit would be reversed in case the plan is surrendered before the premium is paid continually for two years in a row.
2. Deductions under Section 80CCC: Under this section, the deductions would be applicable to contributions made towards pension funds. The maximum limit for deduction would Rs 1,00,000/-. However, the withdrawal or surrender of the policy would be subject to tax deductions. The pension received would be subject to tax.
3. Deductions under Section 80D: Deductions under this section would be with respect to medical insurance premiums. It is application to individuals, Hindu Undivided Families, irrespective of whether they are residents or nonresidents of India. For individuals, the maximum limit for deduction is Rs 15,000/- and for senior citizens it would amount to Rs 20,000/- in maximum deductions. Additional deductions would be applicable for individuals buying health insurance for their parents. For parents below 60 years, the deduction would be Rs 15,000/- and for parents above the age of 60, it would be Rs 20,000/-.

 

In addition, there are certain exemptions under specific sections of the IT Act.

Insurance is a Happy Blend of Protection and Tax Saving

Opting for tax saving plans for insurance in the only way in which you can perform your duties of protecting the risks and interests of your family members and availing tax rebates as a reward. You can manage your worries and concerns and save a decent amount along the way.