Kathmandu. What many taxpayers may not know is that the expenses incurred on life insurance or non-life insurance or health insurance can be deducted into annual taxable income.
Every year, millions of taxpayers lose their legitimately deserved exemptions and incentives because they are not adequately informed about the legal provisions of tax breaks or do not plan for them on time. Especially the fiscal year and 2083. The importance of insurance and various financial instruments for tax savings has increased further after the sweeping overhaul of the personal income tax threshold through the new budget of ’84.
The budget has set a single tax threshold for duo, eliminating the separate limits for individuals and couples. For this reason, for middle- and high-income taxpayers, investments in sectors such as life insurance, health insurance, and retirement funds are the best way to reduce tax liability.
Changes in income tax slab for the current fiscal year 2082. 83 and FY 2083. 84 Comparison of the proposed arrangement
1. Current fiscal year 2082. Tax threshold of 83 Example
According to the current system, the starting limit for unmarried and married people is different and the maximum tax rate is up to 39 percent.
If an unmarried person earns up to Rs 500,000 annually, 1 percent social security tax is levied. After that, there is a provision of 10 percent tax on Rs 2 lakh.
For married couples, 1 per cent tax is levied up to the first Rs 6 lakh, while after that, 10 per cent tax is levied on the next Rs 2 lakh.
To claim income tax exemption on life insurance, property insurance or health insurance expenses for this financial year, you must have such insurance by July 31. Out of the premium paid once, the specified amount can be deducted from the taxable income calculation for the same year only.
2. FY 2083. 84 to Proposed Tax Limit
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The new budget has doubled the tax limit of just 1 per cent to Rs 1 million and reduced the maximum tax rate to Rs 29.
Now, the government proposes to levy 1 percent social security tax on income up to Rs 1 million annually, whether married or unmarried. Income between Rs 10 lakh and Rs 15 lakh will be taxed at 10 percent. Earlier, when this point was reached, taxpayers had to pay 20 to 30 percent of the tax.
How to secure tax exemption facility
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Taxpayers can save a large amount of money by taking advantage of the new tax threshold and claiming the benefits prescribed by the Income Tax Act on time. The major exemptions that insured and taxpayers can claim on their annual income are:
✅ Life Insurance Premium: You can deduct the amount of life insurance up to Rs 40,000 annually from the taxable income.
✅ Health Insurance Premium: An annual fee of Rs. Tax exemption of up to Rs 20,000 can be claimed.
✅ Retirement Fund Contribution: The contribution made to the Citizen Investment Fund, Provident Fund or Contribution-based Social Security Fund is Rs. Up to Rs 5 lakh or one-third of the total income, whichever is less, can be deducted.
✅ Children’s Education Fees: The government has paved the way for the children to claim a waiver of up to Rs 25,000 annually as per the school and college fees.
✅ Donations to approved institutions: Donations or donations to religious, charitable or public organizations recognized as tax exempt by the government are also exempt from tax as per the rules.
✅ Refund of Medical Tax: In the case of approved medical expenses, the amount of tax to be paid directly can be matched within the prescribed limit.
✅ Women tax exemption: Women taxpayers who earn income only from employment will get 10 percent exemption on the total amount of tax to be paid.
✅ Employees working in remote areas get an additional discount of Rs 10,000 to Rs 50,000 as per the geographical classification.
Opportunities for insurance agents and companies not only to get tax exemptions but also to reduce risk, FY 2083. This new law of 84 could be a powerful way to increase sales of life and health insurance. Insurance agents and insurance companies should play a helpful role in making timely tax plans by conducting financial literacy campaigns to their existing and potential insurers.
