Life insurance policies can be useful tax planning tools, because the policy holder is eligible for tax benefits under the Income Tax Act 1961 (Act). Though there are multiple modes for saving tax, life insurance is one of the most effective tax planning instrument. Plans from Max Life Insurance can be used for protection, long term savings and tax planning. There are two kinds of income tax benefits available to individuals with respect to long term savings being made in Life Insurance policies:
The above are extracts from the Income Tax Act’1961. Please note that tax laws are subject to change and hence before placing reliance on the above, the latest version of the relevant sections should be checked. It should also be noted that the change in tax laws could have retrospective effect also. This information should not be construed as expert tax, legal or investment opinion from Max Life Insurance Company Limited. Max Life Insurance Company Limited would not be responsible in any manner for decisions made on the basis of above information. Please consult your tax advisor for claiming tax benefits on insurance products. Sec 194DA of Income Tax Act 1961 provides for deducting tax (TDS) on policyholders payout under life insurance policy w.e.f. 01 Oct 2014. TDS, if applicable, will be deducted at 2% if valid PAN is available upto 31st May 2016. W.e.f. 01st June 2016, TDS rates has been reduced to 1%. Policyholders can furnish forms 15G/15H for non deduction of TDS where total income /estimated total income during financial year does not exceed maximum amount not chargeable to tax. Further in case valid PAN is not available, rate of TDS would be 20%. Get Income tax saving benefits by investing in life insurance policies under section 80C/80CCC & 80D/80DDD. Policy holder is eligible for tax benefits under the Income Tax Act 1961.