If you've not already been able to file your income tax return for the fiscal year 2020-2021, there may be some good news for you, as the deadline has been postponed until March 15. That means you can now perform better tax planning in a short period of time.
We'll go over certain tax deductions that you can take advantage of on your investments, profits, and other sorts of payments. This tax exemption is not applicable under the new tax system.
Individuals and HUFs can claim a total exemption of Rs 1.5 lakh on premium payments for life insurance plans, along with other instruments. To claim this benefit, you do not need to purchase an insurance plan from an Indian insurance firm. If an NRI or foreign national earns tax liability in India, he/she could claim this exemption on the policy bought outside the country under the section 80C of the Income Tax Act. The premium for life insurance will be excluded from taxes.
These policies come with a discount
Any taxpayer can get a deduction for the cost of a life insurance policy for himself, his/her husband or wife, or their kids. This claim can be made for both simple insurance products such as term insurance and insurance-only investment products such as ULIPs. On policies acquired before April 1, 2012, a discount of up to 20% is available. Any insurance issued after April 1, 2012, that is paid 10% or less of the total amount premium is eligible for a discount. At the same time, this range is 15% for the challenged people.
Terms and Conditions required include:
- A tax deduction is offered on a life insurance policy that has been in force for at least 2 years.
- The prior year's deduction is reversed, and the amount is restored to the earnings of the year in which the insurance expired.
- Even if you maintain the annuity plan's cost, you can still earn a tax break under Section 80C.
