Tax Breaks for the Self-Employed: Life Insurance Offers Big Savings
Self-employed individuals in India can significantly reduce their tax burden through strategic use of life insurance, experts say. The old tax regime allows deductions of up to ₹1.5 lakh on premiums paid under Section 80C.
This deduction directly impacts taxable income, leading to lower tax outgo. Furthermore, maturity or death benefits received are generally tax-free under Section 10(10D), subject to certain conditions.
Unit-linked insurance plans (ULIPs) and pension plans often provide additional tax advantages. These policies combine investment and insurance, offering tax benefits on both premiums and returns.
Loan protection policies also offer tax benefits for self-employed individuals, helping shield them from financial setbacks. This is particularly relevant given the inherent risks of self-employment.
The ability to leverage tax benefits through life insurance is crucial for the self-employed. Smart financial planning using these provisions can provide a substantial boost to their financial security and long-term prosperity. This becomes especially critical in the absence of employer-sponsored benefits.
