- 5 FEB 2018
#Budget2018: Insurance opens up new doors for tax saving
Budget 2018, the first in the GST regime and last full union budget of the ruling NDA alliance is the most talked about topic today. As opposed to expectations, it turned out to be a non-populist budget for the masses. However, it did the work it was meant for, i.e., brought a change.
Through the budget presented on Thursday, 1st February 2018, finance minister Arun Jaitley has paved a new way for tax saving through insurance.
- For senior citizens, the limit under deduction u/s 80D rose from Rs.30,000 to Rs.50,000, i.e., senior citizens can now claim increased income tax deduction together with a life cover, which undoubtedly gives you a win-win situation because you can spend on your health more and save more.
- Levying 10% (LTCG) Long Term Capital Gain tax on shares and mutual funds can be bad news for many. But not all doors to getting tax-free returns on the market are shut yet. You can gain good returns through Unit Linked Insurance Plans (ULIPs), as they are still exempt from taxation.
- It has been proposed to introduce a Dividend Distribution Tax on equity-oriented mutual funds at the rate of 10% percent, which will reduce the investor's in-hand return, hence making money back insurance policies even more investment-friendly option for the investors.
The biggest change budget 2018 aims to bring is in terms of insurance, health, and medical sector, the evidence of which can be traced from the undermentioned announcements:
- Propose to increase the health and education cess to 4% which will enable a certain portion in every taxable transaction to be contributed towards health care.
- The finance minister announced a National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage of up to Rs. 5 lakh per family per year for secondary and tertiary hospitalization.
- There's also a talk of reforms in the general insurance sector and consolidation. This means that the government is working towards strengthening and overall effectiveness of the insurance sector and making it stand even stronger in the Indian economy.
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