Kotak e-Term Plan
Kotak e-Term Plan provides a high level of protection to your loved ones in your absence.
Kotak E-Invest Plan
Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs.
Kotak Guaranteed Savings Plan
Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality.
Kotak Lifetime Income Plan
Kotak Lifetime Income Plan gives you the security of your income continuing thru your life and in your absence throughout your spouse's lifetime!
Kotak Health Shield
Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability.
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As you start earning over a certain income slab, you begin filing your taxes every financial year, and one of the major ones you pay is the income tax. So naturally, one of the questions that arise here is how to save tax in India? While the tax amount is the money you pay from your pocket, certain tax saving plans allow you to choose from various tax saving options and avail the best tax benefits. Investing in life insurance can be one of the best ways to save tax. But how to save tax on insurance?
The answer is quite simple. Life insurance policies are income tax saving schemes because the premiums you pay fall under tax exemptions. For instance, if your taxable income per annum is Rs. 7,00,000, and the premium you pay is Rs. 35,000 for a year which can be directly deducted from your taxable income. This proves to be beneficial as now you will have to pay the tax for only Rs. 6,65,000.
Saving tax using life insurance is highly advantageous. This has been made easy with the various sections in the Income Tax Act, 1961, which have facilitated the process to save tax with life insurance. These income tax saving schemes fall under sections 80C, 80CCC, 80D, and 10(10D).
Let us look at these tax saving options in detail:
When we talk about the best way to save tax on insurance, premiums may be the first thing that comes to your mind. This is what this section is all about. Section 80C has provisions on how to save tax on insurance premiums, along with a list of other investment techniques. One can claim deductions of up to Rs. 1,50,000 on the premiums paid to insurance. One noteworthy fact is that the total premium you pay should not exceed 20% of your total sum assured if your policy has been issued before 1st April 2012. However, if your policy has commenced after this date, the limit set for the premium is 10% of the sum assured.
Here the condition to save tax using life insurance is limited to pension plans. The benefits are on the annuity that is paid for the pension plans. It is important to note that the deductions claimed under section 80C and section 80CCC should add up to a maximum of Rs. 1,50,000.
Not only can you save tax on the main insurance plan, but you can also save tax using life insurance on any riders that you purchase. This section is more relevant to health insurance, and if you invest in a critical illness rider or the accidental benefit rider, you can claim deductions under this section.
Out of all the tax saving options, this section talks about the sum assured; according to which, payouts on insurance are exempt from taxes as long as the premium paid does not exceed 10% of the sum assured.
Insurance is an important aspect of your financial goals, and therefore, you must plan for it accordingly. Using life insurance policies as tax saving plans acts as an incentive to invest for a secure future for yourself and your loved ones!
- A Consumer Education Initiative series by Kotak Life