Income Tax Calculator: EXPLAINED | Who can invest up to Rs 2.5 lakh in this life insurance policy to save money


Income tax calculator: In the 2021 budget, the Minister of Finance Nirmala Sitharaman announced an income tax exemption at the maturity of the ULIP (Unit Linked Insurance Plan) up to Rs 2.5 lakh during a particular fiscal year . However, the question is whether someone can invest up to Rs 2.5 lakh in one fiscal year to save income tax? According to tax and investment experts, the answer is a big ‘no’ because ULIP is in section 80C of the Income Tax Act and therefore one can save on income tax up to at Rs 1.5 lakh investment in a single financial year, which includes the Provident Fund (PF), Employee Provident Fund (EPF), Public Provident Fund (PPF), Post Office Tax Saving FD, etc. , the rest of the income tax rule will remain the same.

Speaking on the tax rules applicable to ULIP; SEBI Registered Tax and Investment Expert Jitendra Solanki said: “There is no change in income tax rule regarding this ULIP life insurance policy. ” a tax benefit under section 80C as before February 1, 2021 but according to the new announcement, we will obtain an income tax exemption at ULIP maturity on an investment of up to Rs 2.5 lakh during an exercise. “

Emphasizing how one can benefit from the benefit announced in the 2021 budget, Kartik Jhaveri, Director of Wealth Management at Transcend Consultants, said: “Those who are not employees can invest in ULIP up to Rs 2.5 lakh by taking advantage of Rs 1.5 lakh under section 80C, then benefit at maturity on the same. However, they will not be able to claim a tax benefit beyond Rs 1.5 lakh invested in ULIP. They will benefit from an income tax exemption at maturity. Those who are salaried, must first calculate how much their section The 80C limit is used in EPF or PF. Then, the remainder of the amount that ‘they can think of investing in ULIP as long as the investment is for a very long term, say more than 15 years. ”He said that a ULIP investment for such a long period can expect a return of 8 at 9% on his money, which is in line with the interest rate of the EPF, which is current of 8.5%.

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During the presentation of the Union budget 2021, the Minister of Finance Nirmala Sitharaman had declared: “In order to rationalize the taxation of the ULIP, it is proposed to authorize a tax exemption for the product of the due date of the ULIP with an annual premium of up to 2.5 lakh. However, the amount received in the event of death will remain exempt without any limit on the annual premium. The ceiling of Rs 2.5 lakh on the annual premium of ULIP will only be applicable for policies taken out from 01.02.2021 In addition, in order to ensure parity, the non-exempt ULIP will benefit from the same preferential capital gains tax regime as that available to the fund mutual investment.


Esther L. Steinbach

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