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LIP Payment deduction u/s 80C of I.T.Act (Income Tax)

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This query is : Resolved



( Author )
24 February 2011

My client being an Individual on whose behalf his brother has paid one LIP premium of Rs.2750/- through his saving bank account by mistake.Now the query is whether my client can claim as deduction u/s 80C towards such LIP Payment being paid by his Brother from his savings or not.


CMA. CS. Sanjay Gupta

( Expert )
24 February 2011

No he can not claim deduction u/s 80C since it is not paid from his account. Deduction is only available to the payer. Also the brother can not claim 80C Deduction.


CA ASHISH GUPTA

( Expert )
24 February 2011

Yes, he can claim. treat the payment as loan given to the assessee by brother and return the amount of loan now.


CMA. Subhash Kumar Jha

( Expert )
24 February 2011

Agree.. if the LIC receipt is in the name of your client & he has documentation that he has taken advance from his brother, then its allowed under section 80C.


CMA Ramesh Krishnan

( Expert )
24 February 2011

Yes. He can take deduction

Hi Sanjay.. in this 2 things need to be seen

1.Section 80C first seeing the on name which policy has been taken and payment receipt, even though brother has paid the amount but final receipt and policy in assessee name only

2. Brother not paying reqularly for his brother from his account,it is mistaken, so it can be repaid further, so assesee become payer

Incase brother has taken policy on assessee name and he is making payment regularly, then your view is correct.

So my view opinion, it can be claimed by the assessee under 80C



CMA. CS. Sanjay Gupta

( Expert )
24 February 2011

Thanks Ramesh Ji, Please further clarify.....

So what if

1) father pays premium of sons life insurance policy from his bank account, can son claim deduction u/s 80C by showing it as loan.
Or
2) if husband pays premium on life insurance of wife by issuing cheque from his account can wife claim 80C deduction?


CMA Ramesh Krishnan

( Expert )
24 February 2011

your point no 2 having mutual claim eligibility, in details

Husband can claim for LIC premuim on his wife, children, but at the same time son cannot claim for his parents.

So when the one premium payment can be claimable by 2 persons, then we need to verify the actual payment made from which account (for avoiding double deduction), example if husband can claim for wife and wife can claim for husband then we need to check the actual payer

But in your 1st point even son pays premium his account for father, he cannot claim deduction since 80C lic premuim not allowable for parents

In case any updation, please update to us


CMA. CS. Sanjay Gupta

( Expert )
24 February 2011

No Ramesh Ji what i am saying is---

Policy in the name of the son.
Father pays the premium from his savings account.
So can son claim the deduction u/s 80C?

If that be the case then even my friend can pay my lic premium from his bank account and since the receipt will bear my name (policyholder) i am eligible to claim the deduction u/s 80C.


CA Ravi sisodia

( Expert )
24 February 2011

according to me at present sistuation he can not claim deduction u/s 80C.


Author Pulkit Gupta

( Expert )
25 February 2011

With due respect to all my seniors I wanna express my opinion.
According to rule 80C Tax deduction is allowed for the insurance premium paid for self, spouse and children.
Now question arises that the concept of loan given by Ashish Sir is applicable or not.
Well I have tried it in many cases by considering it as Loan/advance and it was successful in each case.So he can claim deduction u/s 80C.
@Sanjay Sir - If it can be claimed in case of brother/ father then this concept is also applicable in case of friend but usually we are used to such adjustments in case of relative only.


B.Chackrapani Warrier

( Expert )
26 February 2011

The issue may be viewed in view of the legal position which has changed from time to time.

1) there was a condition in the then 80C that the premium should be paid out of the income of the assessee.
2) When section 88 was introduced , the said condition was there and subsequently taken away.
3) In the reintroduced 80C, the condition of payment out of one's own income is missing, meaning there by, the loan affair as said by the above learned members can be worked out.


CA AYUSH AGRAWAL

( Expert )
27 September 2013

All Queries & comments I had been gone through..

My Single Reply....for All Queries..

Yes Allowed.


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