Finance has been a topic that is being widely debated and discussed these days. The beginners in finance often wonder if investing in bonds and tax saving plans are the best starting point in personal finance.Similarly, the veterans in the financial world also debate whether one should go for ELSS or Debt Fund or National savings certificates to save taxes. One of the reasons for such debates is the lack of knowledge to evaluate various financial products.
So, we thought of discussing how one finds out whether a product will bear tax benefits or not. Therefore, if you’re looking to invest in a tax-saving plan and wondering how it can help you save money on taxes, make sure you keep reading to find out.
What Are Saving Plans?
Savings plans are life insurance plans designed to provide individuals with the opportunity to save and accumulate a fund for the future. These investment plans help you meet your long-term and short-term financial objectives.
The savings plan offers various features so you can invest based on your needs and risk tolerance. In addition to your savings, you can also get insurance coverage. In case of death during the policy period, your beneficiary will receive a payment to fulfil their daily financial needs.These plans are introduced by the Indian Government, banks, or fin institutions. One advantage of savings plans is that they are backed by government agencies, which makes your investment completely safe. Savings plans are low-risk financial instruments, but they offer good returns.
How Premium and Returns Help Save Taxes on Saving Plans?
The Income Tax Act allows you to save taxes in multiple ways. One way is through Section 80C, 80CCC, or 80CCD (1). You can make use of these sections by investing your capital in certain tax saving plans like life insurance, ULIPs, pension plans, and many more.As per section 80C of the Income Tax Act of India, you can enjoy deductions of up to Rs. 1.5 Lakh on the premiums you’ve paid towards the policy. Moreover, according to section 10(10D), the maturity proceeds and returns are also exempted from taxes.
Why Is It Beneficial To Invest in A Tax-Saving Plan?
Everyone in the world works hard to earn money. To live a comfortable life, we need money. If your income is greater than a certain amount, you will likely be required to pay taxes, which may eat up a significant portion of your income.
Tax planning is the only way to reduce the burden of taxes and increase your savings at the same time. Various financial instruments help out in saving taxes. A good tax saving plan not only saves your taxes but also provides financial safety.
A financially reliable bank should offer useful advice, but at the same time and in the long run, the customer will benefit from adequate interest and be able to withdraw it to be able to meet their financial requirements in the future.
How to Use Policy Premium Calculator?
An insurance premium calculator can be really handy to assess the various specifications of your required policy and identify whether it fits the bill for you or not. Here are the steps you need to follow to use these calculators:
- The individual will need to enter information about their personal situation, such as marital status, smoking habits, etc
- Put in your preferred sum assured amount. The policy buyer will also need to put in the required tenure for their policy
- In percentage format, enter the estimated increase in income per year. When the individual is older, his or her income increases as well. Therefore, to make a reasonable projection, an individual will need to enter the estimated annual income increase
- For comparison, the insurance calculator will display different plans as per the details entered by the policy buyers
Based on the parameters you’ve set in the policy calculator; you’ll get a list of suggested plans that meet your requirements. Now you just have to conduct your research and shortlist a suitable tax saving plan to proceed.
Benefits of Insurance Premium Calculator
An insurance premium calculator is easy to use, quick, and efficient. By entering your annual income, your name, the date you were born, and so on, in under 2 minutes, you will be able to get premium quotes for several different types of policies.
2. Makes Budgeting Easier
With the help of tons of insurance policies in the market, figuring out which one will work for you can be difficult. By using an insurance premium calculator, you’ll be able to create a good budget for your coverage based on your needs.
3. Better Idea of Coverage
Using the insurance premium calculator, an individual can estimate the amount of life coverage that would fit his or her budget. The individual can also see whether the level of coverage chosen is high enough to provide financial security to the family in case of any unexpected event.
4. Compare Different Plans
On a single platform, you can compare an extensive range of plans offered by different insurance companies and check the benefits offered by each. This makes insurance premium calculators highly efficient to compare different plans.
5. Free of Cost
The calculator can be used free of charge. Many companies also provide promotions that give buyers advantages when they buy insurance online. Buyers can use the term insurance calculator to compare plans online and pick one according to their requirements.
Saving taxes is an ideal way to increase your savings. The more you save, the better off you are. Although there are numerous saving plans available in India, tax saving plans are one of the best options for tax saving. They offer exemption from all kinds of taxes and have some other benefits as well.