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Deduction of lic premium

S.K.Agrawal (Others) (114 Points)

04 August 2015

If I pay lic premium of policy of my working son, can he claim deduction u/s 80C. If I pay through cheque then and if pay in cash then.

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8 Replies

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 05 August 2015

if you pay then you can claim, cash is a differnt matter

S.K.Agrawal (Others) (114 Points)
Replied 05 August 2015

My question was that can my son claim it if I pay premium in cash or through cheque.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 06 August 2015

If such policy is in his name, then he can claim deduction.

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 06 August 2015

I would like to differ. The person making the payment is entitled to deduction. If the father is paying for LIC policy of his son, then the father is eligible to deduction under section 80C.

Regards,

S.K.Agrawal (Others) (114 Points)
Replied 06 August 2015

Actually on one site I read that if premium is paid by father through cheque then son can not claim deduction only father can claim. But if father pays in cash then son can claim deduction in his return. Please clarify.

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 07 August 2015

What you have read in the site is Correct.

The person paying the Premium is only eligible for claiming deduction.

If you pay by chq, your son is not eligible to claim deduction of the same in his Income Tax Computation.

If you pay by cash, Your son will be eligible to claim deduction, (you have to show by way of book entry that this amount was paid by your son from his Cash )

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 19 August 2015

Hello @ Hitesh
If I pay the premium by chq , Will my son be elegible to claim deduction?

(If I show by way of book entry that this amount was paid by my son from his Cash/bank account to me)

Thanks

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 19 August 2015

Yes you may do so.. You can Say in your defence that the Amount was paid by you on behalf of your son which was later reimbursed back to you within a reasonable period. Always remember that the Burden of proof is on the assesse. Assesse has to prove what sort of Transaction was it and how it got settled.