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Tuesday, 20 November 2012

Plan your tax in advance

     Tax planning is very important...... To reduce your tax liability you should invest in instruments that offer you an additional Rs. 1,00,000 tax benefit in addition to basic tax relief. Well, a life insurance policy offers you one such avenue to claimNotification to an insurance company that payment of an amount is due under the terms of the policy. tax benefits and also offers you and your family protection against any unforeseen circumstances.
      If you make your investments at the beginning of the year, and then take into account the tax deductible, you can easily decide your monthly and yearly expenses. It is clever to consider tax planning within the scope of your financial planning as neither one can be considered in isolation.

      Life insurance policies can be useful tax planning tools, because the policy holder is eligible for tax benefits under the Income Tax Act 1961 (Act). Though there are multiple modes for saving tax, life insurance is one of the most effective tax planning instrument. Plans from Bajaj Life Insurance can be used for protection, long term savings and tax planning. There are two kinds of income tax benefits available to individuals with respect to long term savings being made in Life Insurance policies:

  • Deductions

Tax Slabs

This explains how the various tax brackets in India work and how much tax relief we are all eligible for. The new tax structure was initiated on 1st April 2012.
The tax structure is as follows:

Tax slabs for Financial Year 2012-2013 (Assessment Year 2013-2014)
For Individuals below 60 years of age

Income Level

Tax Rate
Upto Rs. 2,00,000Nil
Rs. 2,00,001 - Rs. 500,00010%
Rs. 500,001 - Rs. 10,00,00020%
Above Rs. 10,00,00030%

Tax slabs for Financial Year 2012-2013 (Assessment Year 2013-2014)
For Senior Citizens aged 60 years
or above but less than 80 years
For Very Senior Citizens aged
80 years or above
Income Level

Tax Rate

Income Level

Tax Rate
Upto Rs. 250,000Nil--
Rs. 250,001-Rs. 500,00010%Upto Rs. 500,000Nil
Rs. 500,001-Rs.10,00,00020% Rs. 500,001-Rs.10,00,00020%
Above Rs. 10,00,00030%Above Rs. 10,00,00030%

Surcharge on Income Tax:
There is no surcharge on Income Tax for the Financial Year 2012-2013 for Individuals.

Education Cess & Secondary & Higher Education Cess on Income Tax
Education Cess @ 2% & Secondary & Higher Education cess @ 1% will be payable on the amount of income tax.

Service Tax

All premiumA regular payment made to the insurance company to keep the policy in force.s and charges are subject to applicable taxes including service tax, education cess and secondary & higher education cess as applicable under the prevailing tax laws. With effect from April 1, 2012, Service Tax Rate has been changed to 3.09% on first year premiumA regular payment made to the insurance company to keep the policy in force. and 1.545% on subsequent year premiumA regular payment made to the insurance company to keep the policy in force. for traditional endowment & annuityA contract sold by a life insurance company that provides fixed or variable payments to a recipient, either immediately or at a future date. products and 12.36% for ULIP, Term, Health products & Riders.

  • The above are extracts from the Income Tax Act’1961. Please note that tax laws are subject to change and hence before placing reliance on the above, the latest version of the above section should be checked. It should also be noted that the change in tax laws could have retrospective effect also.
  • This information should not be construed as expert tax, legal or investment opinion from Bajaj  Allianz Life Insurance Company Limited. Bajaj Allianz Life Insurance Company Limited would not be responsible in any manner for decisions made on the basis of above information.
  • Please consult your tax advisor for claiming tax benefits on insurance products.
  • Please note that the revised tax benefits and slabs presented in the Union Budget 2012 shall be applicable post Finance Bill 2012 gets passed and is enacted as law.

Contact No. : 8714476620

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