Enjoy tax exemption with insurance policy tricks
Posted on: 20/Sep/2017 12:09:09 PM
Are you of the kind who postpones tax planning till the eleventh hour? If you are of that kind, you will probably have to make tough choices. Advance investments is a need for you because your goals and future plans largely rely on tax savings. Anyhow, how do you identify the best option? Is there any ways by which you can enjoy both tax concession and financial security?
Below are some of the insurance policies you may invest in
Life insurance
You can ensure your financial future with a life insurance. If you are the only earning member in your family, a life insurance is imperative. In case of any unfortunate event, your nominee shall get a lump sum money. Choose among term insurance, life insurance or endowment policy as per your choice. Once you have enrolled for the policy, you can get rid of all kinds of worries.
Saving tax – here are a few tips
Under the Section 80C of the Income Tax Act, you can enjoy a lot of tax benefits.
If you have an insurance policy that is issued on or after 1st April 2012, it will be possible to deduct tax only if the premium falls below 10 percent.
In case of a diseased or disabled individual who has enrolled for a policy after 1st April 2013, the total tax exemption out of the premium paid will be 15 percent. According to the Income Tax Act, the total tax exemption will be Rs 1.5 lakh.
In case of maturity of policy or death of the holder, the nominee will be able to get tax-free proceeds, according to stipulated under Section 10 (D).
Further, at the end of policy tenure, the lump sum amount you get will also be tax-free.
Maturity amount of life insurance
At the time of maturity of policy, you will get the maturity amount. With the Section 10 (10D), you will be able to enjoy tax exemption on the maturity amount including bonus and sum assured.
According to Section 10(10)(D) of the IT Act, when the life insurance investment is made for up to 5 years period, and you have not withdrawn in between, the maturity amount you get will be tax free.
So, according to this section, you will be exempted from tax for the maturity amount when the ratio of 1: 5 between premium and sum assured is maintained.
