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3 Smart ways for individuals to save tax for FY 2016-17 though insurance

3 Smart Ways For Individuals To Save Tax For FY 2016-17 Though Insurance

Already with rise in the cost of living has caused lot tremors in the life of middle class today .The worries have further aggravated because of current rate of health care inflation which it at its zenith compared to past years. So everybody is looking at smart ways to save a lot of tax to build a good balance between good health and well managed wealth.

There are whole array of financial instruments which are available today which can come with triple advantage to an individual

  1. Help him or her save a lot of tax
  2. Build a wealth for long term future
  3. Create a financial safety net for future emergencies.

When we compare all the options that are available in the market today insurance is something that aptly fits into the whole scheme of things.  Truly speaking there are three options which are available to any individual which if used correctly used can help him or her save a lot of tax.

Option 1: One of the common income tax section which is available to most individuals is Section 80C. Any premium paid towards a life insurance policy to a maximum of Rs.1.5 Lakh can be claimed for tax exemption under this section. This is available for both individuals and HUF assesses. This benefit can be accessed for any type of life insurance plan but the preferred one keeping financial well being in mind is a term policy. Try looking for online term plans because they are quite cheaper than their offline counterparts. An Important factor which one needs to keep in mind while claiming exemption under Section 80C is, for a policy to qualify for exemption the sum assured should be at least 5 times of the premium that you are paying. So if you are paying a premium is Rs.10000 then the minimum sum assured should be Rs.50000 for the policy to qualify for tax benefits.

Another important thing which one should keep in mind while opting for this particular option is that one should not be over skewed with the objective of tax saving. The person claiming tax exemption should first understand how much cover one should look into. It should always be based upon your goals and future liabilities. Going by the rule of financial planning one should always apply for a sum assured value which should be at least ten times of one’s monthly income.

Option 2: The second option which is available is individuals are benefits under Section 80D. Exemption under this section can accessed on the premium that you pay towards health insurance plans. Keeping in view rising cost of healthcare health insurance is now become a mandatory thing but you can avail tax also enjoy tax benefits on the premium that is paid towards these plans to a maximum Rs.25000. Other than this Rs.25000 an individual can also claim for extra exemption of to a maximum of Rs.30000 if one is also paying for health plan of his/her dependent parent. So you can actually a benefit of Rs.55000 to a maximum under this option.

Read Also : How Can One Maximise Tax Benefits On Health Insurance In Fy-2016-17?

Option 3: Last and the most unknown option not very known to most individuals is Section 80CCC.if you paying premium towards an Annuity plan where the objective of the investment is draw the money invested into in the form of pension in later years. In a case like this an individual can claim tax exemption without any limits on the money invested under this plan.

Though the options mentioned above can make a lot of difference towards saving a lot of tax but the challenge still lies in how one should make a balance between their twin objectives of savings tax and managing wealth in a proper way. People generally get over skewed towards either of the objective and end up missing the broader objective of having a safer financial future.