The deduction u/s 80C shall apply only to so much of any premium paid on an insurance policy as is not in excess of 10% per cent. of the actual capital sum assured.
Actual capital sum assured means:
The minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account—
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person.'
So, in my View If the sum assured of a policy is Rs 500000/- and the Premium paid is Rs 65000/- Then only 10% of Rs 500000/-= Rs 50000/- will be allowed as deduction u/s 80C. The Total deductions u/s 80C should not excees Rs 1L
Also remember that any sum received on maturity/ surrender under an insurance policy issued on or after the 1st day of April, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds ten per cent. of the actual capital sum assured will be wholely taxable.
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