Gireesh Bhalla : AMENDMENT TO PROVSION RELATING TO DEDUCTION OF LIC PREMIUMS PAID FROM GROSS TOTAL INCOME

Section 80C provides for deduction in respect of life insurance premia, contribution to provident fund, etc.At present, section 80C(3) provides that the provisions of section 80C(2) shall apply to the amount of any premium or other payment made on an insurance policy, other than a contract for a deferred annuity, eligible amount for deduction is limited to 20% of the actual  capital sum assured [ i.e., premium paid in excess of 20% of capital sum assured will not qualify for the said deduction ].In computing the said capital sum assured, no account shall be taken: (a) of the value of any premiums agreed, to be returned, or (b) of any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. Under the amendment of section 80C(3), w.e.f. 1-4-2013 (assessment year 2013-14 and onwards), provides that the existing provisions of section 80C(3) will be applicable to such policy issued on or before 31-3-2012. Newly inserted section 80C(3A), w.e.f. 1-4-2013 (assessment year 2013-14 and onwards), provides that the provisions of section 80C(2) shall apply to the amount of any premium or other payment made on an insurance policy, other than a contract for a deferred annuity, issued on after 1-4-2012, eligible amount for deduction is limited to 10% (as against 20%) of the actual capital sum assured [ i.e., premium paid in excess of 10% of capital sum assured will not qualify for the said deduction]. For the purpose of section 80C(3A), “actual capital sum assured” in relation to a life insurance policy will mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account: (a) the value of any premium agreed to be returned, or (b) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be received or may be received under the policy by any person.