80C on LIC

This query is : Resolved

umamaheswar (Querist)
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03 January 2009 Dear All,

i have paid lic on behalf of my parents is eligible for my individual tax returns or not. I have elder brother was stil studying. My parents are depending on me

CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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03 January 2009 if your parents are lic on behalf of you wheter this amout is debited in your a/c or not it is important other wise your parents will claim the same in there income

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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03 January 2009 Tax Benefits available for various Life Insurance plans.

The aggregate amount of deduction under all the relevant sections viz. section 80C, section 80CCC and section 80CCD shall not, exceed
Rs.1 Lakh..

1) Deduction from Income for payment of Premium (Sec. 80C).

(a) Life Insurance premia:
The insurance premia paid for a policy is eligible for deduction. The premium paid should not be in excess of 20% of capital sum assured.

(b) Contribution to Deferred Annuity Plans :
The premia paid for a Deferred Annuity , provided such contract does not contain a provision to exercise an option by the insured to received a cash payment in lieu of the payment of annuity is eligible for deduction.

(c) Contribution to Pension/Annuity Plans :
Contribution to New Jeevan Dhara-I and New Jeevan Akshay-V Schemes of LIC are qualified for rebate under this section.

2) Income tax exemption on Maturity/Death Claims proceeds under Section 10(10D)

All the benefits payable under a Life Insurance policy are tax free. However in cases the premium paid in excess of 20% of the capital sum assured within a year, benefits paid excess of premiums will be taxable. The benefits from a key man Insurance policy and any sum received under Sec 80DD, Sub-section (3) are also taxable.

3) Jeevan Nidhi Plan & New Jeevan Suraksha - I Plan (U/s. 80CCC)
Amounts paid from the taxable income to premiums of the above annuity are deductible.

4) Deduction under section 80D
Medical Premium paid for a Health Insurance policy is deductible to the extent of Rs. 15000 for an assessee and/or his family members’ policiy/s. A separate exemption to the extent of Rs. 15,000 for premiums paid for an assessee’s parents is also available. If any one or both of the parents are Senior citizens, then an enhanced exemption limit of Rs. 20,000 is available.
Section 80D also covers payment of premium exclusively for Critical Illness Rider.

5) Jeevan Aadhar Plan (Sec.80DD)

Premium paid for LIC’s Jeevan Aadhar Plan (for the maintenance of an handicapped dependent) is eligible for deduction from the total income to the extent of Rs.50,000 and to the extent of Rs.75,000/- where handicapped dependent is suffering from specified severe disability.

6) Exemption in respect of commutation of pension under Jeevan
Suraksha & Jeevan Nidhi Plans. (Section 10(10A):
A payment received by way of commutation of pension from Jeevan Suraksha & Jeevan Nidhi Annuity plans is exempt from tax

K V Subba Rao

K V Subba Rao (Expert)
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03 January 2009 Note 1 to Para 107.1.2a in Page A-207 of 31st edition of Singhania's Ready Reckoner reads as follows:

"In the case of an individual policy should be taken on his own life, life of the spouse or any child..."

I understand from the above that LIC Premium paid by an individual on the lives of his/her parents does NOT qualify for Deduction u/s 80C