SBI Tax Saving Child Plan 2025 | Tax Benefits of SBI Child Plans

Is SBI Child Plan a Tax-Saving Scheme?

All insurance schemes come with tax benefits under the Income Tax Act of India. If you are planning to buy a child plan, the premiums and the benefits will be considered for tax exemptions. There is however a limit to how much you can save. SBI child plans are no different. You can grow a corpus for your child while saving yourself some money on taxes.

Tax-Savings Through Insurance Premiums

The premiums that you pay for an SBI child plan can be directly implicated in your income tax filing. Here are some important points to note -

Tax benefit on premiums falls under Section 80C of the Income Tax Act of 1961.

You can claim a maximum of Rs.1.5 Lakhs in a year as a tax benefit.

The limit applies to other investments such as Public Provident Fund (PPF), and tax-saving FDs as well.

Tax Benefits on Maturity Benefits

All the proceeds from SBI Life child insurance plans are exempted from tax deductions under section 10(10D) of the Income Tax Act of 1961. So the death benefit or the maturity benefit that a child is entitled to on the parent’s death and at the end of the policy tenure is fully exempt from taxes.

Taxes Levied on SBI Child Insurance Plans

Now unit-linked insurance plans earn you higher returns than any other insurance scheme because of their market-linked nature. However, there are certain charges such as the LTCG (long-term capital gains) that are levied on SBI child ULIPs. Here are some important pointers -

Tax is deducted on the capital gains or profit made by you and not on the amount invested by you.

If your profit from an SBI Child Plan is more than Rs.1 Lakh, LTGC is levied at 10%.

If the annual premium for the ULIP is up to Rs.2.5 Lakhs, no such charges are levied.

However, if the annual premium is more than Rs.2.5 Lakhs, you will be charged a flat 10% on the final fund value at the time of maturity.

No such charges are applicable in the case of traditional child insurance policies. For a more in-depth understanding of the tax implications on SBI child plans, you should talk to tax advisors.

Over to You!

Tax savings should not be the only reason to buy a child plan from SBI Life. Your goal should be to create a corpus that is big enough for the child to finish his/her education. SBI child plans offer you opportunities to do so through its SBI Life Smart Scholar Plan and SBI Life Smart Champ Insurance Plan. Along with this, the child gets financial assistance after the death of a parent. These plans come with a lot of flexibility in terms of choosing the policy term, funds, sum assured, etc.