We get a lot of queries on our website but sadly more than 60% of the queries are from policyholders who are unhappy with their policy purchase and want to exit the policy. Therefore, we make constant efforts to create awareness about the associated benefits of different kinds of insurance policies. There are many products in the market which offer tax benefits but merely taking a product on someone’s recommendation to save tax in the short-term can harm your finances in the long-term.
Listed below are some of the popular tax saving instruments available to us without much of a hassle. Also, I have categorized them under the respective section of Income tax law to make your life simpler while mentioning these in your Income Tax Returns.
Insurance
Section 80C
Product: Life Insurance
-Protection Plans
-Savings/Investment Plans
-Maximum amount of investment on which tax exempted is Rs. 1,00,000
Section 80D
Product: Health Insurance
-Self and Family
-Dependent parents
-The maximum amount of investment on which tax exempted is Rs. 15,000
-Paying insurance premium for physically disabled family member provides tax exemption of Rs. 1,00,000
As a special feature, you can find an excerpt of our earlier article on the top 10 popular online term plans in India. This list of plans should help you to quickly decide which term life insurance plan you can buy online instantly – zero commission, no paperwork and tax benefits.
| Policy Name | Insurer’s Claim Ratio | Max Age at Maturity (yrs) | Outstanding feature |
| ICICI iCare | 96.53% | 75 | No medical tests |
| HDFC Life Click 2 Protect | 96.17% | 65 | – |
| SBI e-Shield | 95.48% | 70 | Choice of Increasing cover |
| Kotak e-Preferred Term | 92.10% | 70 | Option to step-up the life cover |
| Bajaj Allianz i-Secure | 90.61% | 70 | Option to take Death Benefit in Annual Installments |
| Aviva i-Life | 89.55% | 70 | – |
| Bharti AXA e-Protect | 87.70% | 75 | Family Care Benefit |
| Reliance e-Term | 84.58% | 70 | Medical tests at doorstep |
| Tata AIA i-Raksha Supreme | 83.94% | 80 | Only plan with limited pay option |
| AEGON Religare i-Term | 66.06% | 75 | Inbuilt Terminal illness rider |
Traditional Savings Products
Section 80C
Product:
-Fixed Deposits (5 yr)
-Public Provident Fund (PPF)
-The maximum amount of investment on which tax exemption can be availed is of Rs. 1,00,000
Exemptions
Section 80E
Product: Interest on Higher Education Loan
-Full amount of interest can be availed under Income Tax Act
Section 80G
Product: Donations, Charities
-50% or 100% of the donation amount can be claimed for Tax Exemption
Section 80GG
Product: House Rent (only if HRA is not claimed)
-Amount on which tax exemption can be availed is 25% of the total income, or Rs.2000 per month, or Excess of rent paid over 10% of total income.
Section 80U
Product: For Disabled people
-The maximum amount of investment on which tax exemption can be availed under this Section is Rs.50,000 to Rs.100,000 depending upon the severity of the disease.
Every section of the Income Tax Act which provides benefits and exemptions has its own clauses and T&C which are not very difficult to understand. Kindly read them carefully before using them so that you can save the right amount of tax – rightly!
