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What Are The Tax Advantages Of A Money-Back Guarantee Policy?

Published On Mar 08, 2022

Money-back policies are crucial since they give monies at regular intervals after a specific amount of time till the conclusion of the policy term. In our volatile world, where things change quickly, one may experience ups and downs without warning. When everything is going well, there is no difficulty. It's when things take a sudden turn for the worst and you're financially ruined. You could desire to create a corpus for your future development and success. There might be a variety of reasons for you to save money, such as investing in your business every few years, funding your child's school, and so on. Money-back plans are the greatest savings programs you can rely on.

Tax Advantages of a Money-Back Guarantee Policy

Let us now examine the various parts of the Income Tax Act of 1961.

1. Section 80C 

The advantages of these programmes are defined under Section 80C of the Income Tax Act of 1961. Furthermore, the maturity benefit, survivor benefit, and bonuses of monthly investment plans are also tax-free. A tax deduction of Rs. 1,50,000 can be claimed under Section 80C. Simply expressed, the greatest amount that can be deducted from the tax that you must pay under section 80C is Rs. 1,50,000. This benefit may be used by a person or an HFU. The maximum amount that may be claimed under this clause is Rs 1,50,000 for each of the fiscal years 2018-19, 2017-18, and 2016-17. However, if you do not receive a tax deduction after paying excess taxes, but you have invested in PPF, Mediclaim, or have tuition costs, an Income Tax Return can be submitted to claim deductions.

2. Section 80D

This section addresses the Deduction for Medical Insurance Premiums Paid. This deduction is available to a person or an HFU under Section 80D. The maximum deduction is Rs 25,000, which you can use to pay for health insurance for yourself, your partner, and any dependent children. If they are under the age of 60, they are eligible for an extra Rs 25,000 deduction. The extra deduction is Rs 50,000 if the parents are beyond the age of 60. If the taxpayer and both parents are over the age of 60, the maximum deduction is Rs 1,000,000.

3. Section 10 (10D)

According to Section 10(10D) of the Income Tax Act of 1961, the amount guaranteed plus any bonus paid or surrender of policy or on the death of the life assured is totally tax-free for the recipient subject to a few circumstances. As a result, the insurance will only be taxable in the hands of the assured person in the following circumstances: Section 10(10D) applies to a life insurance policy issued after 1.4.2003 but on or before 31.3.2012 if the premium due in any year exceeds 20% of the actual sum assured. The policy proceeds would thereafter be taxable in the insured's hands.


Under the Income Tax Act of 1961, three major sections are accessible for tax benefits. The portions that are accessible include the 80C, 80D, and 10(10D). The maximum deduction under Section 80C is Rs 1,50,000. The maximum general deduction under Section 80D is Rs 25,000. The additional deduction is Rs 25,000 if they are under the age of 60. The deduction is Rs 50,000 if they are beyond the age of 60. The deduction is Rs 100,000 if both the taxpayer and the parent are over the age of 60. If the life assured fails to furnish a PAN card, TDS of 20% might be charged under 10(10D). If a PAN card is presented, the TDS percentage that can be imposed is 2%.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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