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In life, there are many challenges we cannot avoid at any cost; however, we can develop the right approach to deal with them smartly. For example, when it comes to managing financial challenges, one of the most common problems faced by you is how to manage your tax liability. While many of you think that tax saving is a complicated task, it is not that difficult.

There are various investment options, which avail comprehensive tax savings under different sections of the Income Tax Act, 1960. Some of the investments for tax saving in India that you can include in your financial portfolio are as follows-

1. Health Insurance Plans

One of the most crucial investment for tax benefits that you can purchase is a health insurance cover that will help you maintain financial stability in case of a medical emergency.

Health insurance plans allow you to avail tax deductions upto Rs. 25,000 under Section 80D of Income Tax Act if the policy is in your name or that of your spouse, kids (dependent) or parents who are below the age of 60. If your parents are above the age of 60 years, then the total deductions may increase up to Rs.50,000 for every financial year throughout the investment period.

Moreover, another investment option that you can consider is a critical illness plan to help protect yourself against life-threatening ailments such as cancer and their treatment. Cancer insurance plans offered by reputable insurers such as Max Life Insurance offer a significant amount of money to help manage your medical treatment expenses – from diagnostic test to surgery and hospitalization.

2. Public Provident Fund (PPF)

AA savings instrument offered by the government, PPF can help mobilize your savings, so that you can earn significant returns on your savings, in the form of government-sanctioned interest. Investments under PPF are tax-deductible, up to Rs. 1.5 lakh under Section 80C.

PPFs is a long-term instrument with a maturity period of 15 years, and you can quickly start with a sum as low as Rs.100.

Tax Saving

3. Unit Linked Insurance Plan

Another tax-saving investment option that you choose is a Unit Linked Insurance Plan or ULIP. It will offer you twin benefits of securing your family and achieving your goals, along with helping you save tax.  Under Section 80C, you can claim a deduction of about Rs. 1.5 lakh, thereby saving a great deal of your hard-earned money.

In this plan, a part of the premium that you pay will get allocated towards your insurance cover, while the rest will get invested in different funds. So, with the multiple benefits provided by ULIP, you can consider this to save tax the smart way.

4. Term Plan with Return of Premium Feature

If you’re planning to save tax using investments, why not go for one that will also secure your family in your absence, along with giving you tax benefits? Term Life insurance is one such instrument that provides your family with a large sum of money as insurance benefit so that they may be able to remain financially immune to life’s uncertainties, especially in your absence.

Moreover, if you go for a term plan with return of premium option, then you will also receive maturity benefit equalling the total premiums paid by you, in case you survive the insurance tenure.

Save Tax the Smart Way

Tax saving in India is not difficult if one plans well. There are plenty of options available among investments for tax benefits. Just identify which plan fits your needs well in terms of securing your family as well as in helping you inch closer to the achievement of your dreams and goals. Don’t seek tax benefits in a standalone way, instead build a holistic portfolio to get multiple benefits. So, be smart and save tax in the best way possible.

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