How will my savings in a life insurance plan help my tax situation?
What follows below will give you a good idea of how your investments not only protect you and your family; they also protect your taxes.
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 2011.
The tax structure is as follows:
| Tax slabs for Financial Year 2011-2012 (Assessment Year 2012-2013) |
| For Men below 60 years of age | For Women below 60 years of age |
| Income Level | Tax Rate | Income Level | Tax Rate |
| Upto Rs. 180,000 | Nil | Upto Rs. 190,000 | Nil |
| Rs. 180,001 - Rs. 500,000 | 10% | Rs. 190,001 - Rs. 500,000 | 10% |
| Rs. 500,001 - Rs. 800,000 | 20% | Rs. 500,001 - Rs. 800,000 | 20% |
| Above Rs. 800,000 | 30% | Above Rs. 800,000 | 30% |
| Tax slabs for Financial Year 2011-2012 (Assessment Year 2012-2013) |
For Senior Citizens aged above
60 years but less than 80 years | For Very Senior Citizens above 80 years |
| Income Level | Tax Rate | Income Level | Tax Rate |
| Upto Rs. 250,000 | Nil | - | - |
| Rs. 250,001 - Rs. 500,000 | 10% | Upto Rs. 500,000 | Nil |
| Rs. 500,001 - Rs. 800,000 | 20% | Rs. 500,001 - Rs. 800,000 | 20% |
| Above Rs. 800,000 | 30% | Above Rs. 800,000 | 30% |
Surcharge on Income Tax:
There is no surcharge on Income Tax for the Financial Year 2011-2012 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
Service tax, education cess and secondary & higher education cess will be charged to the policyholder on the applicable charges/premiumA regular payment made to the insurance company to keep the policy in force. as notified by the Government of India from time to time.
This levy of service tax, education cess and higher secondary education cess is in accordance with Section 65(105)(zx) of the Finance Act 1994, as amended by Finance (No.2) Act 2004 and Section 65(105)(zzzzf) of Finance Act 2008 and is subject to change from time to time.
Disclaimer - The information given above is a broad understanding of the Income Tax Provisions and is subject to changes in the tax laws. Therefore the same is not specific advice in regard to your personal tax and investment matters. Kindly contact your tax consultant for exact calculation of your tax liabilities.
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