Section 80c deduction on lic premium
**zubair**
(Querist) 14 April 2014
This query is : Resolved
I recently purchased two LIC policies. I paid the premium in cash. I want to know can my father claim deduction under section 80C in his income tax return on the premium I paid in cash. My father is a pensioner aged 71 & I am 35.
Guest
(Expert) 15 April 2014
Being a major of 35 years, how you can expect that your father can claim income tax rebate on LIC policies, if you purchased for yourself?
Kumar Doab
(Expert) 15 April 2014
You are adult. Your father is not a proposer. He can’t.
Except in limited single premium policies, regular premium policies the insurers won’t insure him that too after medicals…………………………ROI I such policies shall be very low. Avoid ULIP.
Advise him to think of NSC etc and nominate family members.
Retain a Income Tax lawyer, for advice on tax matters. On line discussions have its own limitations.
**zubair**
(Querist) 15 April 2014
Thanks to all. Kindly throw more light on Circular : No. 574, dated 22-8-1990 at http://law.incometaxindia.gov.in/Directtaxlaws/act2005/sec_080c.htm which is,
"496. Whether deduction is available in respect of premia paid on the life insurance policies on the lives of adult children, irrespective of their status; for example, premia paid on a policy on the life of a married daughter
1. Section 80C of the Income-tax Act allows, inter alia, deductions while computing the total income of an assessee of any sums paid in the previous year by the assessee individual out of his income chargeable to tax, to effect or to keep in force an insurance on the life of the assessee or on the life of the wife, or husband, or any child of the assessee. Representations have been received by the Board regarding the availability of relief under this section in respect of premia paid on the life insurance policies on the lives of adult children, irrespective of their status; for example, premia paid on a policy on the life of a married daughter.
2. It is hereby clarified that relief under the said sections is available in respect of such cases also. This relief will continue to be available under the new section, introduced by the Finance Act, 1990, as the language of the new section is in pari materia with that of section 80C of the Act.
Circular : No. 574, dated 22-8-1990."
Also refer to http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=CIR&schT=&csId=609b12ed-b0d4-4770-8f6b-8c22e64be5b3&crn=&yr=1990&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws
T. Kalaiselvan, Advocate
(Expert) 15 April 2014
You have raised a very good query. Your auditor will be having a proper reply for this.
R.V.RAO
(Expert) 15 April 2014
THE above INCOME TAx circular talks about as to who can be the beneficiary under an insurance policy.
your query is asking about IT deduction. these are two different issues.
For the ins. premium paid by you from your income, your father cannot claim deduction of IT .only you can claim the IT deduction.
If you are aiming at tax planning in such matters,pl. note the planning part should be done before hand in consult with your auditor.
**zubair**
(Querist) 16 April 2014
Respected Mr. R.V.Rao, please read the circular carefully and then reply.
Respected Mr. Kumar Doab, (1) Section No. 80C and (2) Circular : No. 574, dated 22-8-1990 of income tax is silent on the "PROPOSER".
Respected Mr. PS Dhingra, with utmost respect I want to remind you here we are discussing law not morality.
(1)http://law.incometaxindia.gov.in/dit/Income-tax-acts.aspx
(2)http://law.incometaxindia.gov.in/dit/Circulars.aspx
Anirudh
(Expert) 16 April 2014
Dear Mr. Zubair,
As desired by you, I read the circular No. 574 carefully before providing this answer to your original query.
This circular talks about availability of deduction under Sec. 80C to an assessee who has paid the insurance premia from out of his income chargeable to tax.
Since the premia was paid by you in cash, it cannot be established as to who in fact paid it - i.e. from your father's income or from your income.
However, in case of scrutiny, your father should be in a position to indicate about the availability of cash in his hands at the relavant point of time to pay the amount of premium involved. If this could be done, YES, by all means, your father can claim the benefit under Sec. 80C in regard to the premia paid on the life of his son (though the son may be a major).
Guest
(Expert) 16 April 2014
Mr. Zubair Ahmed,
Quite strange, as a querist, instead of reviewing your own question, you are trying to teach Shri R.V. Rao, Shri Kumar Doab and me lessons of law as well as ethics!!!!!!!!!!!!!!!!!
Your statement addressed to me, "I want to remind you here we are discussing law not morality," reveals as if you want to teach me and others the lessons on morality and ethics. By the way, what part of my question, "how you can expect that your father can claim income tax rebate on LIC policies, if you purchased for yourself," relates to morality, not law on income tax? A question arises, when your father has not spent a single paisa out of his income to purchase the policies, how you want to reduce his tax liability? In other words, you wanted to convert your unaccounted and untaxed cash income (black money) as a part of white income and also to get rebate from IT department on your own policies, supposed to be not purchased out of your father's income.
Rather, if you try to do so, your act in itself can be treated as immoral and against the Tax laws.
Further, your statement addressed to Shri R.V. Rao, "please read the circular carefully and then reply," you also want to teach Shri Rao and others lessons on law, as if by posing a question, you wanted only to test the knowledge of experts, rather than getting your problem solved.
If you see your own question, just tell, have you mentioned anywhere that your father purchased two LIC policies out of his own income for you? I wish, while referring circular No. 574, dated 22-8-1990, you could have reviewed your own question, which is quite incomplete.
You have neither mentioned that the policies were purchased from your own income nor stated your father purchased policies for you. Do you think, we should have presumed on your behalf that the policies were purchased by your father out of his pension income?
Also, do you feel that Income Tax law is governed by morality and ethics only, but not by earnings of individuals?
So, before raising a finger towards the experts, must try to introspect yourself to know what you asked and why you asked.
Last but not the least, had you been so knowledgeable about income tax laws and ethics related to the said law, you would not have asked a silly question from the experts with quite an incomplete information.
**zubair**
(Querist) 16 April 2014
Thanks Mr. Anirudh, finally the query is resolved.
Guest
(Expert) 16 April 2014
So, by agreeing to Mr. Anirudh's interpretation, you ultimately admit that you mis-interpreted and misquoted the Circular No. 574, dated 22-8-1990>
R.V.RAO
(Expert) 16 April 2014
sri dhingra ji's and sri anirudh ji's views are very much respected in this forum, for their upright and professional opinions.i stay with their stand.
iam left with a small doubt here.
in these days of total computerisation of insurance offices,when the policy number is entered in computer,automatically the receipt shows the policy holder's(proposer) name and address and print the receipt accordingly.
so how can any body manage to get a different name on the ins. premium receipt even if cash payment is made?
in the age of hand written and manual receipts this could be managed.
Anirudh
(Expert) 16 April 2014
Dear Mr. R.V.Rao,
I also value your views.
In the instant case the simple query is whether the father can take 80-C benefit in respect of the premium paid on the life insurance policy of his major son.
There is no doubt a family head can take such benefit in case he makes the payment towards premium on his own policy, his wife's policy and that of his children. The question arose whether he can take benefit in respect of the premium paid by him from out of his income in respect of policies of his major children. This Circular 574 answered in the affirmative.
Now the further question is, the premium having been paid in CASH by the major son, whether his father would be able to claim the 80-C benefit in respect of such premium paid.
The requirement is one has to have paid the premium from out of his taxable income. In case one pays through cheque from one's own account, no further proof may be required to state that one has paid from out of his taxable income.
In the instant case, even though the payment of premium has been paid by CASH by the major son, the father will be in a position to take the benefit, provided he can show that he has enough cash in his hands (i.e. from out of his own taxable income) to make the payment of premium.
That is the limited point. Who proposed etc., etc., I don't think will come into play or would have any impact to the question in issue. (I shall be obliged in case your views are different on this aspect, in which case, without doubt, as always, I shall stand corrected.)
R.V.RAO
(Expert) 16 April 2014
thanks. sri anirudh ji.
i saw many times, auditor satisfies himself before filing our tax returns that receipts in respect of 80C,80G,80D etc... deductions claimed by assessees stand in their name.hence the doubt raised by me.THANKS.
T. Kalaiselvan, Advocate
(Expert) 21 April 2014
I have my own doubt about the last views expressed by expert Mr. Anirudh on the subject issue. This is an exemption under section 80C of Income Tax act wherein as per the circular 574 dated 22.8.1990, the premia paid on on a policy on the life of a married daughter has been quoted as an example, I dont know if I have misinterpreted the contents of the said circular, but the circular repeats this example in more than one place, hence.
H.M.Patnaik
(Expert) 11 December 2016
The only point here is that the onus lies on the assessee to prove that the premia on LIC policyof Adult son is paid out of own income for availing benefit of dedn. u/s. 80c of the Income tax Act.
