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LIC Premium Advance Payment Eligible for IT Deduction

BINU.M.S (MCOM MBA ICWAI-Inter(Studying)) (197 Points)

12 March 2010

Dear Friends,

If a person makes payment of LIC Premium which will due in the next Financial Year(ie,in 2010-2011)in 2009-2010 itself.That means he makes an advance payment of LIC premium.In such a case whether he can claim that LIC premium amount for claiming Income Tax deduction for the Financial Year 2009-10

Please share your ideas

Thanks In Advance

BINU.M.S

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21 Replies

PANKAJ SHARMA (ACCOUNTS MANAGER) (79 Points)
Replied 12 March 2010

In My View, He can claim the 80C deduction for the advance payment. But he would not be eligible to claim the deduction in the Next financial Year. Neither the Party , i.e L.I.C will issue a Premium Paying Certificate. If L.I.C issues the Premium Paying Ceritificate then he can claim the 80C deduction in the financial Year 2009-10 itself.

I may be wrong. This is just a discussion and not a confirmation.

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saida (Finance) (205 Points)
Replied 12 March 2010

Hi Binums, You can claim deductions of LIC Premium U/s 80C even for advance and arrears payments which is paid during the Previous Year (2009-10). The relevent section says "Deduction is available on teh basis of specified qualifying Investments/Contributions/Deposits/Payments made by the taxpayer DURING THE PREVIOUS YEAR". regards: Saida..

vijay singla (learner) (340 Points)
Replied 12 March 2010

i agree with saida

Daxa manek (CA) (108 Points)
Replied 12 March 2010

I think you may get discount on advance payment of Insurance payment from Insurance co but not the deduction in income tax for advance payment u/s 80C

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 12 March 2010

Deduction will be allowable subject to that it will be restricted to 20% of the sum assured as deduction is allowable on payment basis

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ANKIT PATWA (student) (25 Points)
Replied 12 March 2010

You are eligible for ded. u/s 80c because deduction is available on payment basis and hence in this case if u pay premium in advance u may get ded. in itself that previoys year.

Dilip Wankhede (A/c Manager) (63 Points)
Replied 12 March 2010

Dear Friends
You are eligible for ded. u/s 80c because deduction is available on payment basis .

saravanan (proprietor) (71 Points)
Replied 12 March 2010

Hello,

This is unnecessary question. because,

you can't pay next year premium in the month or advance premium and not accepted by LIC

OK.

CA Pramod Jain (manager finance) (1577 Points)
Replied 12 March 2010

lic advance premium payment can be claimed u/s 80c in the year of payment.

Dintakurthi Tirumala (CA FINAL) (15994 Points)
Replied 12 March 2010

Section 80C allows deduction as per cash basis i.e on payment basis not on accrual basis. so the deduction u/s 80C allows in the financial year when the payment made

OM SAI SRI SAI JAI JAI SAI

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Max Payne (employed) (2574 Points)
Replied 12 March 2010

Combined reading of Aditya Sir's and Saravanan's replies is sufficient.....

tejpal chauhan (accountancy) (28 Points)
Replied 12 March 2010

we know that deduction of LIC Premium is claim on payment basis.Hence payment made in advance for LIC Premium is eligable for deduction u/s 80c for the F.Y in which it is made.

tejpal chauhan (accountancy) (28 Points)
Replied 12 March 2010

Well the deduction u/s 80c is made on payment basis. Thus The deduction of advance premium is allowable in the F.Y in which it is made.

CA DVS Satyanarayana (Manager - Finance & Accounts) (241 Points)
Replied 13 March 2010

hai...You are eligible to claim Advance payment of LIC as exemption u/s 80c but subject to maximum of Rs.1,00,000/-. But in the next year FY you can't claim.