Section 80c

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Raghav (Querist)
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29 March 2013 Dear Sir,

I have a insurance policy where the sum assured is 3.30 Lakhs.I purchased this policy in March 2013. The total tenure of policy is of 12 years but I have to pay premium only for 7 years which is amount of Rs 49,400/- anually. Can i get the exemption of the premium in FY 2012-13 as my accounts person saying that premium is more than 10% of sum assured than I can not the get the tax benefit.

Kindly suggest me the same.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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29 March 2013 You can get the exemption for such payment u/s80C but didn't have the exemption of full amount i.e you haven't the exemptio of Rs.49,400 you have the exemption of Rs.33,000/-. Because of according to the section 80C any payment made for LIC as perimium eligible for deduction under section 80C upto maxium of 10% of sum assured for each policy. I.e their have sub limit for LIC premium u/s 80C deduction.

The logic is same for your clear explanation. You know there is maxium exemption limit u/s 80C is Rs.1,00,000 in case if any one has invested in the 80C savings more than Rs.1,00,000 then allowed upto Rs.1,00,000 only thus way there is internal limit for LIC premium i.e restructed upto 10% of sum assured.

So you have to eligibility for deduction u/s 80 for LIC premium upto Rs.33,000 only.

OM SAI SRI SAI JAI JAI SAI

Raghav

Raghav (Querist)
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30 March 2013 Dear Sir,

OM SAI RAM!!

Sir, I got you but the explanation given in income tax is :

"It is provided in section 10 (10D) that any sum received under a life insurance policy including bonus will not be exempt from total income if the premium payable in any of the years during the term of the policy exceeds twenty percent of actual capital sum assured. It is now proposed that from the assessment year 2013-14, exemption under section 10 (10D) will be available only those life insurance policies in which premium payable will not exceeds ten percent of capital sum assured in any of the year during the term of the policy.

Similar amendments are proposed in sub section (3) of section 80C that only those life insurance premium are eligible for deduction under section 80C which does not exceeds ten percent of capital sum assured.

This amendment will take effect from the Assessment Year 2013-14."

Here the act is saying that the ploicy is not eligible so if policy is not eligible then how can we get the exemption upto 10% of sum assured.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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23 July 2025 You're absolutely right to raise this point, and your understanding of the amendment is correct.

✅ Clarification on Section 80C Deduction – Life Insurance Premium
From Assessment Year (AY) 2013-14 onwards (i.e., from Financial Year 2012-13), an important amendment was introduced in Section 80C(3) regarding life insurance premium eligibility:

🧾 Key Provision (Post Amendment from AY 2013-14)
Deduction under Section 80C for life insurance premium is available only if the premium does not exceed 10% of the actual capital sum assured, for policies issued on or after April 1, 2012.

📌 What This Means in Your Case
Policy issued: March 2013 ✅ (i.e., after 1-April-2012)

Sum Assured: ₹3.30 lakhs

Annual Premium: ₹49,400

10% of ₹3.30 lakhs = ₹33,000

Since your premium exceeds 10% of the sum assured, **you are not eligible for any deduction at all under Section 80C for this policy. There is no partial deduction (i.e., ₹33,000 deduction is not allowed either).

❌ Common Misunderstanding
Some people think that if the premium exceeds 10% of sum assured, only the excess portion is disallowed. That is incorrect. The policy fails the eligibility test entirely, and no deduction under Section 80C is allowed for such a policy.

🧠 Also Note:
The same 10% rule applies for exemption under Section 10(10D) (maturity proceeds). If the premium exceeds 10% of sum assured, the maturity amount will also be taxable.

The old limit of 20% applies only to policies issued before 1 April 2012.

✅ Conclusion:
Your insurance policy does not qualify for deduction under Section 80C for FY 2012-13 (AY 2013-14), because premium > 10% of sum assured.

No partial deduction (₹33,000) is allowed.

Be cautious in future policies to keep premium ≤10% of sum assured to remain eligible.

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