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IS Late fees paid on LIC premium allowed for Sec 80 C exempt

Narayan (Dy.Mgr- F & A) (24 Points)

29 December 2010

Hi,

Whether Late fee paid on LIC premium is allowed for exemption in Section 80C. Pls clarify.

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30 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 29 December 2010

not allowed

Rahul Agarwal (Future CA) (217 Points)
Replied 29 December 2010

Agree With U S

B. Umapathy (student) (405 Points)
Replied 29 December 2010

not allowed

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 29 December 2010

not allowed

CA. Dashrath Maheshwari (TaXpert) (15090 Points)
Replied 29 December 2010

Dear Friends,

Normally to avoid any future tension, CA's are not taking interest amount in consideration BUT

as per Section 80C(2) any sums paid or deposited in the previous year by the assessee—

(i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4);

is allowable for deduction subject to:

* Total amount paid under this section should not be more than 1 Lac (Except given exception)

* Where, in any previous year, an assessee—

(a) in case of any single premium policy, within two years after the date of commencement of insurance; or

(b) in any other case, before premiums have been paid for two years;

In the light of above text from bare act, In my opinion any amount paid within two years of last payment under the said policy, to keep that policy in force, is allowable under this section.

However,following link can also be checked for proper understanding and making mind in this regard:

1. https://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/cirsec80c.htm

2. https://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=ITAC&schT=&csId=de2e44de-d3f9-4153-9b35-f47bd711340e&rdb=sec&yr=75996b99-a798-4098-bca8-e66ee23fe426&sec=80c&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws

3. https://www.pdicai.org/ansDisp.aspx?queId=11262

4. /blog/it-rebate-on-late-fee-paid-for-life-insurance-premium-388.asp

5. https://www.policywala.com/showthread.php/938-Rebate-on-Late-fee-paid-for-Life-Insurance-Premium?p=2366&viewfull=1

Thanking you,

yours in service,

3 Like

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 29 December 2010

Allowed Agree With DM Sir

1 Like

manoj katara (Service) (209 Points)
Replied 29 December 2010

Agreed with D Maheshwari Sir

CA BARKHA MITTAL (B.COM, CA) (149 Points)
Replied 29 December 2010

late fees interest on LIC is not allowed.

Ajay Garg (CA FINAL) (101 Points)
Replied 29 December 2010

allowed

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 29 December 2010

Interest is paid to keeping the policy in force , hence interest is allowed U/s 80C.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 29 December 2010

(5) Where, in any previous year, an assessee—

(i) terminates his contract of insurance referred to in clause (i) of sub-section (2), by notice to that effect or where the contract ceases to be in force by reason of failure to pay any premium, by not reviving contract of insurance,—

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as per LIC terms grace period of 30 calander days are available for payment without interest, afterwards the insurence does not works unless the permiums are regularized, so it comes as breach of contract.