Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Is 80c deduction eligible if premium of lic/ppf.........

Ankit (None) (75 Points)

06 August 2016

Hi guys. I wanted to ask that if an employed person has a LIC/PPF in his/her name but the premium has been paid by his/her parents from their income, then can that person claim that premium to get 80c deductions on his own taxable income?

Ex- X has gross income of Rs. 4,00,000 in a F.Y. His 80c contributions from company are Rs. 40,000. The limit for 80c in that F.Y is Rs. 1,00,000. X has a LIC and PPF whose total investment in that year comes to Rs. 1,60,000. This whole amount was paid by his/her parents. So, can X use this LIC/PPF to raise his 80c deductions to their limit i.e Rs. 1,00,000?

Thanks

Reply
Follow
Share

23 Replies

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

only premium paid by tax payer is allowed

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Ankit (None) (75 Points)
Replied 06 August 2016

Originally posted by : RUDRA
	only premium paid by tax payer is allowed

Okay. But isnt the money gifted by relatives considered as tax free?

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

yes we can claim it as tax free

Ankit (None) (75 Points)
Replied 06 August 2016

Originally posted by : RUDRA
	yes we can claim it as tax free

Okay. So my confusion is if the money gifted by parents in form of LIC/PPF is not taxable, then doesnt that become money of that employee? Why cant he/she claim 80c deduction on that?

Thanks

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

if you dont have income from business it does not matter who paid it u can claim once but if u have income from business it will be risk for u

Upgrade to CAclubindia Pro. Subscribe Now!

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

Originally posted by : Ankit
	Originally posted by : RUDRA yes we can claim it as tax free Okay. So my confusion is if the money gifted by parents in form of LIC/PPF is not taxable, then doesnt that become money of that employee? Why cant he/she claim 80c deduction on that? Thanks

how one can claim expenses paid by others for hisself

Ankit (None) (75 Points)
Replied 06 August 2016

Originally posted by : RUDRA
	Originally posted by : Ankit Originally posted by : RUDRA yes we can claim it as tax free Okay. So my confusion is if the money gifted by parents in form of LIC/PPF is not taxable, then doesnt that become money of that employee? Why cant he/she claim 80c deduction on that? Thanks how one can claim expenses paid by others for hisself

Okay. So money gifted by relatives is tax free, but if that money is used to pay the premium of LIC/PPF then that premium cant be used to apply for deduction in 80c? Am I right? We should only claim 80c deductions that we have incurred from our own taxable income, right?

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

you are confusing between tax free and deductions both are diffrent. if gift received form other than relatives it is taxble under the head income from other sources. if gift received from relatives it is not taxable under this head that does not mean it is allowed as deduction just it is not taxable as income

u can calim 80c but problem is u have income from business later may be pblm to you hope you get the meaning

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

u can calim 80c but problem is u have income from business later may be pblm to you hope you get the meaning

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

Originally posted by : Ankit
	Originally posted by : RUDRA Originally posted by : Ankit Originally posted by : RUDRA yes we can claim it as tax free Okay. So my confusion is if the money gifted by parents in form of LIC/PPF is not taxable, then doesnt that become money of that employee? Why cant he/she claim 80c deduction on that? Thanks how one can claim expenses paid by others for hisself Okay. So money gifted by relatives is tax free, but if that money is used to pay the premium of LIC/PPF then that premium cant be used to apply for deduction in 80c? Am I right? We should only claim 80c deductions that we have incurred from our own taxable income, right?

u can calim 80c but problem is u have income from business later may be pblm to you hope you get the meaning

Upgrade to CAclubindia Pro. Subscribe Now!

Ankit (None) (75 Points)
Replied 06 August 2016

Originally posted by : RUDRA
	you are confusing between tax free and deductions both are diffrent. if gift received form other than relatives it is taxble under the head income from other sources. if gift received from relatives it is not taxable under this head that does not mean it is allowed as deduction just it is not taxable as income u can calim 80c but problem is u have income from business later may be pblm to you hope you get the meaning

Okay. Thank you a lot for the answer. I have another question related to the same topic. Please consider if this person has claimed the benefit in 80c due to this LIC/PPF. Lets say it happened in F.Y 2011-12. This person has also not filed the return for that year. So, can now this person pay the amount of tax he didnt paid due to 80c deduction in the Income declaration scheme, 2016 with 45% taxation rate?

Thanks

RUDRA (CA FINAL) (149 Points)
Replied 06 August 2016

first let me know how he claimed deuction without filling return???

Ankit (None) (75 Points)
Replied 06 August 2016

Originally posted by : RUDRA
	first let me know how he claimed deuction without filling return???

He didnt know it was not right. As he was a salaried employee, his company deducted TDS on his income. As the financial year end nears, company asks if the employees have made any savings. If they have, the company adjust the tax deduction accordingly. So, this employee gave the proof of premium submitted in the policy in his name, so the company took it into account and deducted less tax.

pavan (Student CA Final ) (29 Points)
Replied 06 August 2016

If it is treated as a gift from relative it is obviously tax free, and included in the hands of recepient. If it is included in income why cant we claim 80C deduction ?