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Lic deduction 80 c

Pravin Dinkar Patil (Accounts Officer) (25 Points)

06 March 2015

if policy n d name of employee parents, employee s unmarried. . can he get exemption of 80c againt premium paid for said policy

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7 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 06 March 2015

Deduction u/s 80C for L.I.P. is allowed to an individual, only when the policy is in the name of individual himself, spouse or any child of such individual.
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Hence, deduction is not allowed in the case of individual’s parent(s).

CA Pooja Sharma (Chartered Accountant) (192 Points)
Replied 07 March 2015

Any premium paid for life insurance of parents is not eligible for deduction u/s 80c.

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 07 March 2015

What about NSC purchased in the name of spouse or minor children.

PANKAJ (MBA) (21 Points)
Replied 07 March 2015

Pooja mam Can you clear to me 80c deduction in brief

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 07 March 2015

80 C SAVINGS - WHO's NAME CAN BE DONE ,MINIMUM HOLDING PERIOD

Scheme particulars	Available to	Can be for	amount cap	Holding period
Life Insurance premium(read in details )	HUF	Member of family	20% of Sum Assured	Two year
Life Insurance premium(read in details )	INDIVIDUAL	spouse,own,children (major or minor,dependent or not)	do	Two year
Non -Commutable deferred annuity	INDIVIDUAL	spouse,own,children (major or minor,dependent or not)	Nil	Nil
Deferred Annuity deducted by Govt	INDIVIDUAL	spouse,own,children (major or minor,dependent or not)	20 % of salary	nil
Statutory provident and recognised Provident fund	INDIVIDUAL	Individual only on his own name	nil	In case of Rpf 5years
Public Provident Fund	INDIVIDUAL	spouse,own,children (major or minor,dependent or not)	100000	6 years /15years
National Saving Certificate	INDIVIDUAL HUF	own name	nil	nil
Ulip of UTI and LIC mutual fund(Dhanraksha)	HUF	Member of family	nil	5 years
-DO-	INDIVIDUAL	spouse,own,children (major or minor,dependent or not)	do	do
specified tax saving mutual fund	INDIVIDUAL HUF	own name	nil	3 year
payment of house loan	INDIVIDUAL HUF	own name	nil	5 year
tuition fees	INDIVIDUAL	any two children	nil	nil
specified fixed deposit with scheduled bank	INDIVIDUAL HUF	own/joint name first name must be assessee	nil	5 year

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 07 March 2015

Deduction under section 80C

Section 80C allows for deduction only on payment basis.

Provident Fund (PF) & Voluntary Provident Fund (VPF: PF is automatically deducted from your salary. Both you and your employer contribute to it. While employer’s contribution is exempt from tax, your contribution (i.e., employee’s contribution) is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF). Current rate of interest is 8.5% per annum (p.a.) and is tax-free.

Public Provident Fund (PPF): Among all the assured returns small saving schemes, Public Provident Fund (PPF) is one of the best. Current rate of interest is 8.70% tax-free (Compounded Yearly) and the normal maturity period is 15 years. Minimum amount of contribution is Rs 500 and maximum is Rs 1, 50,000. A point worth noting is that interest rate is assured but not fixed.

Life Insurance Premiums: Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction. Please note that life insurance premium paid by you for your parents (father / mother / both) or your in-laws is not eligible for deduction under section 80C. If you are paying premium for more than one insurance policy, all the premiums can be included. It is not necessary to have the insurance policy from Life Insurance Corporation (LIC) – even insurance bought from private players can be considered here.

Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C.

Home Loan Principal Repayment: The Equated Monthly Instalment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest. The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act (Income from house property).

Stamp Duty and Registration Charges for a home: The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house.
National Savings Certificate (NSC) (VIII Issue): National Savings Certificate (NSC) is a 5-Yrsmall savings instrument eligible for section 80C tax benefit. Rate of interest is 8.50%t compounded half-yearly. If you invest Rs 1,000, it becomes Rs 1516.20 after five years. The interest accrued every year is liable to tax (i.e., to be included in your taxable income) but the interest is also deemed to be reinvested and thus eligible for section 80C deduction.

Infrastructure Bonds: These are also popularly called Infra Bonds. These are issued by infrastructure companies, and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions.(these have lost their charm as additional tax rebate of Rs. 20000 is NOT given now from FY 2012-2013 onwards).

Pension Funds – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C – it means that the total deduction available for 80CCC and 80C is Rs. 1 Lakh. This also means that your investment in pension funds upto Rs. 1 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC cannot exceed Rs. 1 Lakh.

5-Yr bank fixed deposits (FDs): Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled for section 80C deduction. Interest amount – taxable.
tds on interest @ 10%.
If investment made in joint name, only 1st holder is eligible to claim deduction & 2nd holder can’t avail of deduction for section 80c for investment.

Senior Citizen Savings Scheme 2004 (SCSS): A recent addition to section 80C list, Senior Citizen Savings Scheme (SCSS) is the most lucrative scheme among all the small savings schemes but is meant only for senior citizens. Current rate of interest is 9.20% per annum payable quarterly. Please note that the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won’t earn any further interest. Interest income is chargeable to tax. The account may be opened by an individual,

Who has attained age of 60 years or above on the date of opening of the account.
Who has attained the age 55 years or more but less than 60 years and has retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of opening of the account within three months from the date of retirement.
No age limit for the retired personnel of Defence services provided they fulfill other specified conditions.

5-Yr post office time deposit (POTD) scheme: POTDs are similar to bank fixed deposits. Although available for varying time duration like one year, two year, three year and five year, only 5-Yr post-office time deposit (POTD) – which currently offers 8.40 per cent rate of interest –qualifies for tax saving under section 80C. Interest is compounded quarterly but paid annually. The Interest is entirely taxable.

NABARD rural bonds: There are two types of Bonds issued by NABARD (National Bank for Agriculture and Rural Development): NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB). Out of these two, only NABARD Rural Bonds qualify under section 80C.

Unit linked Insurance Plan: ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of equity investments.They has attracted the attention of investors and tax-savers not only because they help us save tax but they also perform well to give decent returns in the long-term.

Others: Apart from the major avenues listed above, there are some other things, like children’s education expense (for which you need receipts), that can be claimed as deductions under Sec 80C.