Many buy insurance policies to reduce their tax outgo. However, insurance could lose its relevance under the new, optional income tax regime. This is because according to the budget proposal, a taxpayer is allowed to pay a lower rate of tax if they forego deductions and exemptions.Although it is advised not to use insurance solely for the purpose of tax saving, under the existing regime there are various tax sops that allow you to save tax via life and health insurance. There are various sections of the Income-tax Act, 1961 under which you can claim tax benefits.Tax advantages of life insurance Section 80CThe premium paid towards a life insurance policy such as an endowment, whole life, money-back, term insurance, and unit-linked insurance plans (Ulip) for self, spouse, children or a member of Hindu Undivided Family (HUF) can be claimed as a deduction under section 80C of the Income Tax Act. However, it is important to note that this deduction is subject to a maximum of Rs 1.5 lakh per financial year. While calculating tax payable, the deduction amount is subtracted from gross total income thereby reducing taxable income and tax payable.Section 80CCCA deduction of the amount paid towards any annuity… Read full this story
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