You can invest heavily till March 31, there is no limit on these tax saving policies

Currently, all your investments in non-linked insurance policies are eligible for completely tax free returns. However, the rules of ratio related to premium and sum assured are applicable on this. However, this is going to change from the next financial year. Because in the budget 2023, a limit of Rs 5 lakh has been imposed on such non-linked insurance policies, in which the amount of maturity will be exempted from tax.

What does the New Testament say?

This means that if you invest in a non-linked savings policy of a life insurance policy, then the maturity amount will not be exempt from tax, if the premium in the policy is more than Rs 5 lakh annually.

Policies sold till March 31, 2023, if they are out of this offer, will not be affected. Not only this, if you buy these policies before this date, then the person will continue to get tax exemption on future premiums as well.

What will be the effect of change?

The aim of the government is to stop those routes, in which the amount of tax free maturity is there. It had earlier imposed a limit on Unit Linked Insurance Plan (ULIP) investment and now from next year it is going to implement this step on traditional plans. Experts say that it may happen that this may increase the purchase of term insurance policies, which are completely life insurance policies and do not have a savings component.

For High-Net Worth Individuals (HNIs) and those falling in higher income tax brackets, traditional insurance policies have been a way to generate good post tax returns through debt investments. For example, if you invest in Fixed Deposit (FD) and you get 7 per cent return, then their post tax return will come down to 4.9 per cent. However, if the return on these policies is more than 6%, which is completely tax free, then a higher post tax return is available.