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Effective Tips for a Smarter Tax-Saving Plan To Reduce Your Tax Burden

Paying income tax is an important aspect for every individual who has an earning and the earning is more than the minimum income threshold of tax. Income tax contributes to the government’s revenue and helps in the development of the Indian economy.

Though paying income tax is important, it reduces your overall earnings. This is why taxpayers try to save taxes, and thanks to the provisions in the Income Tax Act, there are ways to reduce your tax liability. All you have to do is do some smart tax planning and you can save taxes.

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Written ByShruti gujarathi
AboutShruti gujarathi
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Shruti gujarathi has 5 years of experience in the BFSI sector, and as Manager- Digital Marketing at Bajaj Allianz Life Insurance, manages digital and content marketing. She has had hands-on experience in content strategy, performance marketing and Strategic Alliances over a career spanning 10 years.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 22nd April 2025
Modified on: 27th April 2025
Reading Time: 14 Mins
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Tax-saving tips to save more


Given below are some useful and practical tips that can help you save tax –


  1. Choose the right income tax regime


    There are two tax regimes – the old tax regime and the new tax regime. Both regimes have different income tax slab rates. Have a look –

     

    Old regime (for individuals aged below 60 years)


    Income levelTax rate

    Up to ₹2.5 lakhs

    Nil

    ₹2.5 lakhs to ₹5 lakhs

    5%

    ₹5 lakhs to ₹10 lakhs

    20%

    ₹10 lakhs and above

    30%

     

    New regime (as changed in Budget 2025)


    Income levelTax rate

    Up to ₹4 lakhs

    Nil

    ₹4 lakhs to ₹8 lakhs

    5%

    ₹8 lakhs to ₹12 lakhs

    10%

    ₹12 lakhs to ₹16 lakhs

    15%

    ₹16 lakhs to ₹20 lakhs

    20%

    ₹20 lakhs to ₹24 lakhs

    25%

    ₹24 lakhs and above

    30%

     

    While the old regime has higher tax rates, it offers deductions under Sections 80C, 80D, 80TTA, 80G, etc. The new regime, on the other hand, offers lower tax rates but does not allow deductions and exemptions.


    You can assess your tax liability under both regimes and choose one that offers the lowest tax liability.


  2. Claiming standard deduction


    If you are a salaried employee and choose the new tax regime, you can claim a standard deduction of ₹75,000 from your taxable income1. This will reduce your tax liability and help you save more.


  3. Restructure your salary


    There are various components of your salary that can be claimed as a tax-free exemption. These exemptions bring down the taxable salary and help you save tax. Some of the common exemptions that you can claim are as follows–


    • House Rent Allowance
    • Meal coupons
    • Mobile reimbursements
    • Children education allowance
    • Children’s hostel allowance
    • Leave encashment, etc.
  4. Savings with home loan

    If you have availed of a home loan below are the benefits that you can claim subject to other provisions of the Act –


    • The principal repaid for the home loan is allowed as a deduction under Section 80C
    • The interest paid on the home loan is allowed as a deduction under Section 24(b). The limit is up to ₹2 lakhs
  5. Use the tax-saving benefits of life insurance


    A life insurance policy not only provides financial security but also helps save taxes. Here’s how4 –


    a.The premium paid for the life insurance policy is allowed as a deduction u/s 80C of the Income Tax Act, 1961 (under old tax redime), up to ₹1.5 lakhs.

    b.The death benefit that the nominee receives is tax-free.

    c.The maturity benefit that is received is also tax-free under Section 10(10D), subject to specified terms and conditions such as ;

    1. If the premium paid on a life insurance policy does not go beyond 10% of the total sum assured for policies issued on or after 1 April 2012, the amount received on the insured’s death or on maturity/surrender is fully tax-exempt under Section 10(10D). Any bonus received is also tax-free under this section.
    2. The exemption applies for policies issued before 1 April 2012 if the premium does not exceed 20% of the sum assured. In such cases, the maturity amount and any bonus received remain tax-free.
    3. For policies issued on or after 1 April 2013, covering individuals with disabilities or diseases listed under Sections 80U and 80DDB, the maturity amount is tax-free if the premium does not exceed 15% of the sum assured.
    4. However, Unit Linked Insurance Plan with annual premiums above ₹2.5 lakh and traditional policies exceeding ₹5 lakh do not qualify for tax-free maturity benefits. The Finance Act 2023 amended Section 10(10D) of the Income Tax Act, removing the tax exemption for maturity proceeds if the total premium for non-linked policies issued on or after 1 April exceeds ₹5 lakh.

    You can maximise these tax-saving benefits of life insurance policies and choose a plan that matches your needs. This will help you plan for unexpected emergencies, save for your financial goals and also lower your tax liability.


Tips for buying life insurance


As life insurance plans can help in saving taxes, they can be a good addition to your portfolio. Here are some tips for buying the right life insurance plan –


  1. A term insurance plan covers the risk of premature demise and can provide financial security to your family. Choose a policy with an adequate sum assured for optimal protection.
  2. If you want to plan a corpus for your child’s future, you can choose child insurance plans. These plans would help you create a savings corpus for your child even when you are not around.
  3. For retirement planning, annuity plans can be a good choice. They can create a source of annuity income for financial independence in your golden years.
  4. If you are looking at life cover along with market-linked investment-oriented returns, choose ULIPs. They can help you earn market-linked returns, provide flexibility, and also give life insurance coverage.
  5. Also, choose suitable life insurance riders to enhance the scope of protection and also claim additional tax benefits.

Save taxes optimally


There are various ways in which you can lower your tax liability legally. So, plan your taxes efficiently and minimise your tax outgo. You can also consult an expert tax professional and look for ways to save taxes. As you lower your tax liability, your disposable income increases. This helps you save more for your financial goals and create an optimal corpus. So, use the tips and plan your taxes efficiently.


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IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

The views stated in this article are 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 the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

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

* The above content is subject to the passing of the Finance Bill 2025 in the parliament.

BJAZ-WEB-ECNF-13891/25

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Disclaimer

*Tax benefits 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.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


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

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits 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.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits 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.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


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


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