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Tax Benefits* on Life Insurance Policy

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* T&C apply | BJAZ-WB-EC-04977/23

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*Tax benefifits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116.

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*Tax benefifits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116.

Section 80C: Deductions Under Section 80C Of Income Tax Act

Section 80C of Income tax Act 1961 is that the deductions are available not only on the salary but the total income of the taxpayer, also called the gross income. This greatly helps in reducing the tax burden. Consider following pointers regarding Section 80 C:

  • These deductions can be availed only by individuals and Hindu Undivided Families (“HUFs”)
  • Partnership Firms, companies, etc. cannot avail of these benefits
  • Taxes on an amount of up to INR 1.5 lakhs can be saved under Section 80C, 80CCC and 80CCD(1) combined

Let us understand these deductions in detail:

1. Life Insurance Premium3

You can claim a tax deduction U/S 80C of the Income Tax Act 1961, for the premium paid for insurance coverage for yourself, your spouse, and your children subject to provisions stated therein.

2. PPF (Public Provident Fund)3

Public Provident Fund is a government-initiated plan where an individual can invest from INR 500 - INR 1,50,000 in a financial year. This investment amount can be claimed as a deduction under section 80C.

3. Senior Citizen Savings Plan2

Individuals who are above 60 years can invest up to INR 1,50,000 per financial year, and this entire amount is deductible under section 80C.

4. Sukanya Samriddhi Yojana2

If you have a girl child who is below 10 years, you can invest in the Sukanya Samriddhi Yojana scheme which allows tax deduction under section 80C subject to provisions stated in the Act.

5. Tax Saving FDs2

If you deposit in fixed deposits for a period of 5 or more years, you can claim for a tax deduction.

6. Equity-Linked Savings schemes (ELSS)3

If you wish to invest in equity funds, you can claim a deduction under Section 80C as per the limits stated in the policy.

7. Home Loan Repayment3

If you have taken a home loan from any banking institution, you can claim up to INR 1,50,000 as a tax benefit on the principal amount. However, this can be claimed only when conditions stated in the Income Tax Act 1961 for claiming this deduction are met.

8. Unit Linked Insurance Plan (ULIP)3

You can claim premiums paid towards ULIPs for an amount up to INR 1,50,000 as a deduction from gross income under Section 80C.

How to Maximize Tax Saving under Section 80C?

The tax saving investment options discussed above are ways to maximise tax savings. While building a corpus for a financially safe future, you also get to reduce the burden of taxes on your monthly budget. As per the Union Budget 2022, you can opt for the old tax regime and continue taking tax benefits under Section 80C4. Choose an appropriate product that acts as tax saving investment and helps you save more.

Conclusion

Under Section 80C of the Income Tax Act 1961, you get a number of solutions to reduce your tax liabilities by making tax saving investments. That's why you may consider making investments in appropriate instruments to increase your financial savings and security by tax savings.

Based on your earnings, expenses, and requirements, you may consider creating a portfolio by integrating life insurance into it, as it offers life coverage and saves taxes. This will help you accomplish two goals in one step.

References

1https://cleartax.in/s/80c-80-deductions

2https://cleartax.in/s/80c-deductions

3https://www.outlookindia.com/business/best-tax-saving-investment-options-available-under-section-80c-news-192409

4https://economictimes.indiatimes.com/wealth/tax/how-your-tax-saving-looks-post-budget-2022-section-80c-more-for-taxpayers/what-happened-in-union-budget-2022/slideshow/89345798.cms

BJAZ-WEB-EC-01784/22

#Survey conducted by brand equity – Nielsen in March 2020

~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

**Past performance is not indicative of future performance.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.

The views stated in this article is not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale. Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.