Updated Mar 17, 2021 | 06:02 IST
The premium paid for health, term and life insurance is tax-deductible under various sections of the Income Tax Act, particularly 80C and 80D. Here s what you should know Paying insurance premiums covers risk and helps save taxes; here s how | Photo Credit: Thinkstock
Building a safety net for healthcare needs has become a central part of investment planning as Covid-19 laid bare the risks associated with neglecting the same. Insurance is one avenue of tax planning which serves the dual benefit of reducing tax burden while giving investors the much-needed cover against contingencies.
The premium paid for health, term and life insurance is tax-deductible under various sections of the Income Tax Act, particularly 80C and 80D. When it comes to saving taxes, insurance comes as the simplest and handy option for many of us.
One needs to take into account the amounts already eligible for deduction as above and can only make fresh investments for the balance deduction, if needed.
Synopsis
While this exercise may not cost much if you invest in load free equity mutual funds especially with the holding period of more than a year, however, when it comes to equities, investors will have to bear transaction cost in selling and buying shares which is most likely to be insignificant compared to tax savings.
Getty Images
One of the ways to maximise your tax-savings before the end of a financial year is by using your equity investments. You can do this by selling and then buying back your equity investments. This can be done, as long as the gains are within Rs 1 lakh, per financial year. Even though this will not give you any tax benefits this financial year, it will help you later.
Synopsis
While this exercise may not cost much if you invest in load free equity mutual funds especially with the holding period of more than a year, however, when it comes to equities, investors will have to bear transaction cost in selling and buying shares which is most likely to be insignificant compared to tax savings.
Getty Images
One of the ways to maximise your tax-savings before the end of a financial year is by using your equity investments. You can do this by selling and then buying back your equity investments. This can be done, as long as the gains are within Rs 1 lakh, per financial year. Even though this will not give you any tax benefits this financial year, it will help you later.
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