Life Insurance Tax Saving Investments
Life Insurance is not a pure form of tax saving investments, yet somehow owing to its dual edged benefits; it makes it to the top of our list. It gets you a life cover that acts as a financial cushion in case of a contingency. Moreover, under section 80C of Income Tax Act, the premium you pay on a life insurance plan is deductible from your total income, thus lowering your taxable fraction. The upper limit for this deduction is Rs 1 Lakh. Even the more evolved forms of life insurance save the tax for the investor under different sections. The premiums paid for ULIPs (Unit Linked Insurance Plans) are exempted from taxes under section 80C.
But this is not all, under section 10(10D), the lump sum that is paid to the beneficiary in case of an eventuality is not taxable. If it's a pension plan, the 1/3rd maturity amount paid out as lump sum is not taxable. Though, the rest 2/3rd fraction paid out as annuity is taxable.