Life Insurance Plans are very popular as a tool to get deduction u/s 80C
of the I T Act. 1. The investment in life insurance can be deducted up
to Rs 1,50,000. It a common perception
that Premium Paid all Life Insurance Policies qualifies for deduction
under section 80C of the Income Tax Act,1961 and full premium amount
qualifies for deduction under section 80C .
Apart from several other items provided under section 80C, a
taxpayer, being an individual or a Hindu Undivided Family (HUF), can
claim deduction under section 80C in respect of premium on life
insurance policy paid by him/it during the year.
Policy to be taken in whose name?
In case of an individual, deduction is
available in respect of policy taken in the name of taxpayer or his/her
spouse or his/her children. In case of a HUF, deduction is available in
respect of policy taken in the name of any of the members of the HUF.
No deduction is available in respect of
premium paid in respect of policy taken in the name of any person, other
than given above.
Overall deduction u/s 80C (along with deduction u/s 80CCC & 80CCD) allowed is up to Rs. 1,50,000
How much deduction available u/s 80C for investment in insurance policies???
Section 80C of the Income Tax Act
provides deduction up to Rs 1,50,000 provided you invest according to
condition given in section itself. One of the most popular way of saving
tax by deduction u/s 80C is purchase of insurance policy. There is
common perception that premium upto Rs 1,50,000 on any insurance product
like life insurance or Unit Linked Insurance plan is fully
allowed.However, this is not correct. The reason for such conclusion is
section 80C (3) and 3(A) of the Income Tax Act which specifies which
premium is eligible for deduction under section 80C of the Income Tax
Act,1961.
