According to a report, most Indians, even younger ones, prefer the old tax regime. While there are several investment schemes available in the market, insurance products, often overlooked in the tax-saving discourse, also serve the purpose. Here’s a look at some of the options.
Policybazaar.com, an online insurance aggregator, shed light on the prevailing trends in its recent pan-India report titled ‘India’s Investment Readiness.’ According to Santosh Agarwal, Chief Business Officer, Life Insurance at Policybazaar.com, the report indicates a significant preference for the old tax regime among Indians, even among the younger demographic.
Notably, 62% of respondents in the age group of 18-30 expressed a preference for the old regime.
While there are several investment schemes available in the market, insurance products, often overlooked in the tax-saving discourse, also serve the purpose.
Here are key insurance options that help in saving taxes when opting for the old regime (Compiled by Paisabazaar):
Term life insurance
Under Section 80C of the Income Tax Act of 1961, taxpayers can avail a maximum exemption of ₹1.5 lakh annually. Term life insurance emerges as one of the options under this.
“Offering fixed premiums over the coverage period, term plans qualify for tax rebates. The sum assured received by dependents is entirely tax-free. It’s crucial to note the premium limits based on the acquisition date, ensuring compliance with the regulations,” Agarwal said.
Unit linked insurance plan (ULIP)
Gaining popularity, ULIPs provide a unique amalgamation of insurance and investment with a minimum five-year lock-in period. Premiums are allocated between life insurance and equity market investments.
Tax savings are possible under sections 80C and 10(10D) of the Income Tax Act, and the fund value upon policy exit or maturity after five years is entirely tax-free.
Child plans
For those aiming to maximise Section 80C savings while securing their child’s future, child plans present an appealing option.
“With various types available, these plans build a substantial corpus and provide returns. Transitioning from ULIP-based plans to safer funds can further enhance the corpus, offering a comprehensive approach to long-term financial planning,” Agarwal said.
Health insurance premiums (Section 80D)
Investing in health insurance not only ensures comprehensive coverage but also provides tax benefits under Section 80D. Up to ₹25,000 is deductible for self, spouse, dependent children, or parents.
For families with senior citizens (60 years and above), the limit extends to ₹50,000, optimising tax benefits while prioritising health coverage.
Source: https://www.cnbctv18.com/personal-finance/income-tax-saving-options-investments-insurance-life-health-ulip-tips-18881561.htm
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