To know about life insurance premiums under 80c, you need to know what section 80c is, the 80c exemption list, and the section 80c limit are. This can be an important initiative for your hard-earned money so that you can save tax under section 80c.
People have the option to lower their taxable income by deducting eligible costs and investments under Section 80c of the Income Tax Act of 1961.
Insurance is a product that, apart from securing one’s future, also helps in saving taxes. By investing in various insurance products, you can simply reduce your tax liability under Income Tax Act Section 80c. However, tax saving is not the main objective of any insurance policy.
In today’s article, I will try to give you an idea about how you can save tax on life insurance under section 80c. I hope the article will be able to give you a practical idea about section 80c. So read carefully till the end.
What is section 80C?
The most commonly used provision of the Income Tax Act is Section 80C. Under this section, you can claim a deduction against one or more investment activities on their taxable income, and it is your right. In this case, you should be aware of your income, investment, and savings calculations before you go to file. Exemptions under section 80C can broadly involve spending your income on two types of activities, namely investment activities, and expenditure activities.
However, provisions of the Income Tax Act allow you to exempt your expenses and investments from tax in certain cases. If the taxpayer plans diligently and claims a deduction u/s 80C, then the overall tax liability can be deducted up to Rs 1.5 lakh. Section 80C in the Income Tax Act helps not only an individual but also contributes to our economy by encouraging taxpayers to save and invest. Next, we will know the life insurance premium under 80c.
Investment eligible for deduction under 80C
Before investing in any sector, you must do tax planning beforehand, which will save you tax. You will not get an exemption on all investments under 80C except in certain investment sectors. Below are some of the investment tax exemptions that you will get under Section 80C.
1. ELSS Investment, or Equity Linked Savings Scheme: A mutual fund program that falls under the category of tax-efficient investing is ELSS. It differs from other investment sectors as it has a lock-in period of only 3 years. In this case, there is no upper limit to investment, but up to 1.5 lakhs can be eligible for a tax deduction as per Section 80F of 1961.
2. PPF Investments or Public Provident Fund: PPF is a type of investment vehicle, and Section 80C of the Income Tax Act exempts all deposits. It is a long-term investment project and can be started with a minimum of Rs. 500, so it can be a means of saving your tax.
3. FD or Tax Saving Deposit: A depositor can avail tax deductions in respect of fixed deposits that fall under section 80C of 1961, and a depositor can avail tax deductions up to one and a half lakhs on fixed deposits. However, its tenure is up to 5 years, which provides tax exemption benefits in addition to returns.
4. Employees’ Provident Fund (EPF): EPF is a provident fund for employees that has a fixed share of the earned money deposited in their account, and you can enjoy tax benefits as well.
5. Repayment of Home Loan: Under Section 80C, you can get a rebate of up to 1.5 lakhs per annum on your plot and home loan components. This is related to your principal repayment. But 80C deduction is never in respect of payment of interest portion of house and plot loan.
6. National Savings Certificate (NSC): A tax deduction u/s 80C can be claimed on an investment in NSC. Interest earned on NSC is taxable, but the interest is compounded every year and the lock-in period is almost the same as other investments (5 years).
7. SCSS, or Senior Citizen Savings Scheme: The scheme is a long-term savings option for senior citizens that provides security in old age as well as benefits from returns. Generally, it can be an ideal investment for people in their sixties, which is tax deductible under Section 80C.
8. Life Insurance: Apart from enjoying premium benefits on life insurance policies, you can claim tax deductions and claims under 80C. You can get a maximum discount of Rs 1.5 lakh in a financial year on term life insurance.
You can find more information here.
9. Deposits in National Housing Bank: National Housing Bank offers you a home loan facility as well as tax exemption under Section 80C.
10. ULIP: The full form of ULIP is unit-linked life insurance that offers investment benefits along with insurance benefits. And its biggest advantage is being under Section 80C.
11. Payment of children’s tuition fees: A taxpayer can claim an 80C tax deduction for certain fees paid for school, college, university, or tuition. A deduction u/s 80C can be claimed against expenses incurred for the education of a maximum of two children.
The life insurance premium under 80C
If you purchase a life insurance policy and enjoy its premium benefits, you may be eligible for a discount. Life insurance coverage provides financial protection to an individual or his family in the event of an accident. One of the best investment options for tax reduction is life insurance.
Under Section 80C of the Income Tax Act, you can begin saving taxes by investing at the beginning of any fiscal year. Under Section 80C of the Income Tax Act of 1961, a person may deduct up to Rs 1.50 lakh off the cost of their life insurance premiums. Apart from providing premium benefits, term life insurance also gives you tax savings. Now you know the benefit of a lifeinsurance premium under 80C.
Today’s topic was life insurance premiums under 80C. In this long discussion, we have tried to present the benefits of Section 80C, areas of investment, and other important information.
I hope you can clear up some doubts on this matter. But if you want to take proper steps with expert advice, you get tax exemption under 80C. You can easily get that opportunity by investing in life insurance. So why delay, take the right decision and save tax?