How to save Rs 1 lakh in tax through these avenues?

Mar 19, 2018 | 2 years ago | Read Time: 2 minutes | By iKnowledge Team

Identify financial products that can help you save tax of Rs. 1 lakh and above in a financial year. 

What was the first thing that came to your mind when the budget was declared? We’re sure you thought on how to save taxes. But with so much information around you, confusion sets in. So, what do you do if you had to save Rs. 1 lakh in taxes? Here’s a quick guide to help you understand how to save taxes with some financial products:

ULIP

A Unit Linked Insurance Plan (ULIP) helps you build a large corpus and at the same time provides financial security to your family in the event of your demise. You can either opt for a one-time premium or an annual premium option in a ULIP. The maximum tax benefit that can be availed is Rs 1.5 lakh in a financial year. The one-time premium option allows you to avail the tax benefit only once when the plan is purchased. Under the annual premium option, you can invest a certain amount every year and avail tax benefits every year. A part of the premium you invest is placed in equity shares or debt instruments, just like a government bond. The remaining premium is used to provide you insurance cover.

Aegon Life offers the iMaximize Plan that can help you with wealth creation. You can invest in six funds that contain equity and debt instruments in different proportions. The insurance cover from iMaximize also protects your family financially.

Medical insurance

Are you taking care of your aged parent (above 60 years) or perhaps suffering from a critical illness? If yes, you can avail a tax benefit of Rs. 1 lakh towards their treatment.

Medical expenses incurred on treating a dependent relative can avail you a tax benefit of Rs. 1.25 lakh.

Retirement planning

Retirement planning may be a necessity at a certain point in life. The earlier you start it, the better. Plan it today when you are young and healthy. Make use of a retirement calculator to arrive at the amount you need to save every month. A retirement plan takes care of your expenses in old age. You can invest in a National Pension System (NPS) and claim a tax benefit up to Rs. 1.5 lakh.

Home loan

Let’s say, you plan to buy a home before you settle down with the help of a home loan. A home loan saves you on taxes. Once your home loan repayment begins, you pay an Equated Monthly Instalments (EMI) every month. The EMI includes the interest and principal portion, but the tax benefits differ for both. You can save tax of Rs. 1.5 lakhs in a financial year towards the principal portion. The tax benefit on the interest is about Rs. 2 lakhs, provided the home is constructed within five years of loan approval.

Conclusion: There are a few options that can help you save a tax of Rs. 1 lakh and above in a financial year. Some offer protection against rising medical bills, while a few can help you create a corpus.  Look at various products based on your interest.  Comparing different plans available in the market can help you decide your best option to invest.

If you are worried about the well-being of your loved ones, a health insurance plan and a life insurance policy such as Aegon Life iTerm or iMax plan will provide you with the much needed peace of mind.

To know about AegonLife’s life insurance products, visit our home page.


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