For a lot of citizens of the country, the best way to save tax is to buy an insurance plan. Insurance policies not only provide comprehensive coverage to the policyholders but also help them save tax. However, if you are only buying term insurance for the purpose of tax benefits, here are certain things you should know.
Benefits under section 80C
As per the Income Tax Act, 1961, the premium amount paid against a life insurance policy for self, spouse, and dependent children is exempt from taxation under section 80C. There is a limit to the maximum amount exempted, which is INR 1.5 lac.
Benefits under section 80D
Section 80D is limited to health insurance plans. There is a maximum deduction of INR 25,000 in a year on the premium amount paid for the health insurance policy for self, spouse or children. The maximum deduction that can be claimed for the payment of premium for your parents is capped to INR 50,000. If your age is above 60 years, you can avail of a deduction amounting to INR 1 lac for the premium paid for self and parents. Individuals below 60 paying a premium for their parents can get a deduction up to INR 50,000 in addition to the above-mentioned amount of INR 25,000 for self and spouse. If your age is below 60 and your parents are aged above 60, the maximum amount you can claim is INR 75,000. Furthermore, there is a benefit of up to INR 5,000 for preventive health checkups under the same section.
Benefits under section 10 (10D)
As per section 10(10D), any amount received on the maturity of the term insurance plan is exempt from tax.
It is important for every individual to invest in a life insurance policy for the financial security of their family in case of their sudden demise. If you have not invested in one, it is time to buy a term plan online. You can benefit from the amount of premium you pay every year and also get a cover for life. The tax benefits are available on all type of life and health insurance policies in the country. If you buy a rider for the policy, the premium amount paid for the same will also qualify for the benefit. The financial year is about to end and it is time to make investments that will help you save tax. So. What are you waiting for? Buy a term plan online and secure the future of your family while saving taxes.