Parmod Agarwal (Assistant Manager) (394 Points)
02 March 2010Dear All,
Our one employee has submitted the LIC Premium Receipt RS 50000/- in the unit plan. He told me that it is one time payment no further payment will be required. But as per act, On the LIC premium rebate Maximum cap 20% of the sum assured are applicable. Please clarify :
either he is allowed Rs. 50000/- us 80-C or Rs. 10000/- 20% of sum assured .
Sum assured is also Rs.50000/-
plz clarify.
Thanks
Parmod
PRAVEEN KUMAR
(MBA (Finance) B.Com.(P))
(3443 Points)
Replied 02 March 2010
Rs. 10000/- 20% of sum assured
raja sekhar
(Accounts Officer)
(62 Points)
Replied 02 March 2010
According to provision s of income tax act, it is clear under section that and lic premium paid is allowed as deduction under section 80-c
It is also stated that the amount of premium is allowed only to the extent of 20% of sum assured.
and there is one mor econdition that it is allowed only is it pais on the lifes of self, spouse and children(Irrespective of that their are dependent/independent or married/unmarried.
So your employee is exemted to the entent of Rs.10,000/- only.
Jayasri
(Article)
(21 Points)
Replied 02 March 2010
Only Rs.10,000 is allowed as deduction under section 80 C
C.Balaji
(Learner)
(1867 Points)
Replied 02 March 2010
Dear Parmod sir...
As per 80C....only Rs.10000/- i.e. 20% of sum assured........
Vivek Angrish
(Manager Finance & Accounts)
(232 Points)
Replied 02 March 2010
Yes, i agree with all the above comments, as we can only provide 20% of the sum assured. So in your case it is Rs. 10000/- Only, only this amount can be claimed for deduction U/s. 80-C
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 02 March 2010
Rs. 10000/- only being 20% of sum assured.............. not more than that can be claimed as deduction............
Sonia M Ketkar
(B.com CA DISA(ICA) Pursuing CS)
(625 Points)
Replied 02 March 2010
Good query! But I have a query. Under same section it is specified that if the contribution is towards unit linked insurance plan then it is full amount contributed ie 50000/- as no 20% limit is specified . Therefore im not sure but i think deduction should be 50000/-. Please help me out!
mallela.ravikiran
(learner)
(136 Points)
Replied 03 March 2010
it is investment plan and it coverse rick also.
in my openion Rs. 50,000/- is exempted.
seniors please clarify if i am wrong.
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 03 March 2010
@ Mallela...
Though it covers risk too...
But the amount eligible for deduction will be 20% of insured amount...
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 03 March 2010
@ Sonia Ketkar...
Hi, i could not find anywhere that if its ULIP, the full amount will be deducted..
Rather, i found conversely...
CA Dhiraj Ramchandani
(CA, M. com)
(10823 Points)
Replied 03 March 2010
[This i found at some tax site, which is utmost reliable....]
SECTION 80C lists down the instruments, which you can invest in order to save tax.
You can invest a maximum of Rs 1 lakh in all these instruments put together and the entire amount of Rs 1 lakh will be deducted from your taxable income.
You can get a deduction for the following investments you make:
1. A life insurance policy or a unit-linked insurance plan (ULIP). The lock-in period for ULIPs is between 3 to 5 years and the returns vary depending on the performance of your fund.
However, if your annual premium exceeds 20 per cent of the sum assured on your policy, you will not get the tax benefit.
2. A retirement benefit plan offered by mutual funds. Examples are the UTI Retirement Benefit Plan and Templeton India Pension Plan.
3. A Provident Fund, provided that the fund is covered under the Provident Fund Act. This would mean investments made by you through salary deduction in the Employees Provident Fund (EPF) account as also investments that you make directly in the Public Provident Fund (PPF). You can invest up to Rs 70,000 in the PPF. The current rate of return on EPF is 8.5 per cent while that on PPF is 8 per cent.
4. An approved superannuation fund. Usually your employer, on behalf of you, does this by deducting the investment amount from your salary.
5. National Savings Certificates (NSCs).
6. Equity Linked Savings Scheme (ELSS) offered by mutual funds.
7. Pension policies offered by insurance companies where benefits were earlier available under section 80CCC. Earlier, there was a limit of Rs 10,000 on such investments; however that ceiling has now been removed.
8. Bank fixed deposits that provide the Section 80C tax benefit. They come in with a lock-in of 5 years.
Apart from the investments mentioned above, you can also get a deduction on certain expenses that you incur. Mainly, these include the principal repayment on your home loan and the tuition fees you pay on your children’s education.
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