The reason you should take insurance is for the significant and cost-efficient financial protection it gives to your family, and not for the additional benefit of tax deductions. In fact, it is time you review your insurance portfolio from a financial protection standpoint, rather than looking at these policies as mere documents that help you save tax. … [Read more...] about Insurance is always important, with or without the tax breaks
Compare whole life insurance to term life insurance
The second major move is the reduced importance of deductions under the new income tax regime. Life insurance premium gets deduction under section 80C, health insurance under 80D. Historically, individuals have awaited increase in the deduction limits under this section. The last such increase had happened in 2018. Such deductions have a two-fold purpose. Other than offering a lower tax incidence to individuals, the deductions incentivized sound financial behaviour. For example, many individuals take solace from the fact that their health insurance premium also helps them save tax. This leads to a spike in retail insurance sales in the last quarter of the fiscal year. In the new regime, for individuals earning up to Rs 15 lakh, these sections may become irrelevant. The details of deductions and exemptions to be removed remain to be seen. It is likely that the tax incidence would be lower without these deductions. First-time buyers may defer their insurance purchase, as an artificial … [Read more...] about More insurance initiatives may be announced over time, outside the budget: Abhishek Bondia
In the proposed new tax regime, both Ulips and equity-linked saving schemes (ELSS) stand to lose section 80C tax deductions. If one were to look at redemptions, however, mutual funds will attract long-term capital gains (LTCG) tax if the aggregate gains are over Rs 1 lakh. But, there is no dilution of tax benefits at maturity for Ulips. The Union Budget 2020 has abolished dividend distribution tax (DDT). Now, dividends will be taxable in the hands of investors. They will now have to compare their tax slab rate with the DDT rate to ascertain the additional tax outflow, if any. It will also increase the compliance burden. For example, senior citizens who invest in monthly income plans (MIPs) will have to keep track of the dividend they earn and file returns accordingly. DDT kept such hassles at bay all these years. So, the current status is not investor-friendly. … [Read more...] about Equity MFs versus ULIPs: Which investment is better after the Budget?
As Barry Schwartz wrote in his book The Paradox of Choice: Why More is Less, ‘Autonomy and Freedom of choice are critical to our wellbeing, and choice is critical to freedom and autonomy. Nonetheless, as individuals having more freedom and autonomy, we don't seem to be benefiting from it psychologically.’ For now, staying focussed on your family household budget is the choice that you should be making, rather than dwelling on the Indian government’s budget. … [Read more...] about Budget 2020’s paradox of choice to taxpayers: to spend or to save?
The budget’s focus on creating a clean, reliable and robust financial sector towards promoting a strong economy had the common man at heart. Towards this end, the increase in the insurance coverage of fixed deposit from Rs 1 lakh to Rs 5 lakh aimed at bridging the trust deficit, increasing financial security and protecting household savings. … [Read more...] about Budget 2020 focused on increasing purchasing power of people: Kamlesh Rao