5 Easy Tax Savings Option for Freshers in India 2020

Before, going into the details of tax saving options, let us list down the primary ways to save tax:

How to Save Tax?

The tax-saving season begins from 1st of April for every taxpaying citizen of India. If you happen to be an income taxpaying citizen, your primary goal is to reduce the taxable income to zero by making adequate investments under different categories provided by the various sections of the Income Tax Act. In this regard, it is highly recommended that the tax-planning starts right from the first quarter of the fiscal year instead of scampering in the final months.  This gives you a better chance of saving the maximum permissible amount under the Act.

Tax saving options for freshers:

The foremost financial investment one should consider are life insurance products. Once you start earning, it is imperative to safeguard the financial future of your family against income loss, pending obligations or any other financial emergencies that may arise after your unfortunate demise.

Life Insurance plans accord two significant tax benefits:

1. Tax deduction under Section 80C

   Tax saving under 80C includes reduction of taxable income is possible up to Rs. 1,50,000.  This includes most of the insurance schemes as well as other government saving instruments.

2. Tax exemption under Section 10(10D)

   This is more of a tax exemption than a tax-saving option. Here, the proceeds of insurance products such as death benefits or maturity benefits are exempted from being taxed. This means that if you have purchased insurance products, the tax-saving is two-fold – both in premium payment and insurance proceeds.
   
   

List of tax saving life insurance plans for freshers:

1. Term insurance plan

   In the case of term insurance, you are able to invest for a specific period of time and get life protection only for the respective time period. As, there is no saving component in this policy, the premium that is to be paid is quite low. Therefore, it is quite popular among the Indian middle class as an insurance product as well as a tax-saving option.

2. Endowment policy

   Endowment Policy differs from the term insurance only in the savings component. It is due to this saving component that the premium also increases, which, when paid, reduces the taxable income. It also has a combination of death benefit with its tax exemption component in the proceeds that is provided to the insured person at the end of the maturity period.

3. Unit Linked Insurance Plan

   ULIP plan offers two-fold benefits – wealth creation and life cover. In this plan, the paid premium is divided into two parts as per your requirements, of which one goes for the purpose of life cover while the other is invested in debt or stock market in order to create more wealth. Additionally, this plan provides the insured person with an option to withdraw the amount partially.

4. Money Back Policy

   This policy is specially made for those individuals who prefer regular pay-outs at certain intervals during the policy term. The division of the survival benefits to that of the death benefits depends on your specific requirements as well. There is also a saving component that is quite similar to an endowment plan, which makes it quite beneficial, especially as you have tax benefit as well as regular pay-out to cater to your regular financial needs.

5. Comprehensive Life Policy

   A comprehensive life insurance plan offers extended coverage for the whole life span of the insured. This life insurance plan offers the maturity benefit to the policyholder along with a death benefit to the nominee.  Moreover, the policyholder can also opt to withdraw the sum insured partially. The policyholder also has the option to avail a loan against the policy.
   
   

Conclusion

Know more long term savings plan and mera term plan on PNB MetLife.

The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability. The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using the tax-saving deductions and exemptions, if possible.