Section 80C of Income Tax Act for AY 2023-24

Claim ₹1.5 Lakh deduction under section 80C of Income-tax Act 1961 for AY 2020-21 for certain payments made in previous year 2022-23.

Amended and updated notes on section 80C of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.

Chapter VIA (Sections 80A to 80U) of the Income Tax Act 1961 deals with the provisions related to deductions to be made in computing total income. Section 80C of IT Act 1961-2023 provides for deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.

Recently, we have discussed in detail section 80B (Definitions) of IT Act 1961. Today, we learn the provisions of section 80C of Income-tax Act 1961. The amended provision of section 80C is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 80C of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Most of Indian Taxpayers enjoy the benefit of income tax 80C deduction. If you are not familiar with the provisions of section 80C of Income-tax Act, 1961, then you are on the right place. I am here to explain you in details about section 80C deduction.

Generally, we invest or expend some money in LIC, PPF, ELSS and NPS etc. for our future benefit. Section 80C offers you to claim such expenditure as a deduction to reduce your tax liability. Thus, the section 80C opens various investment options to the taxpayers (Individual or HUF) which not only generate handsome returns for them but can also be claimed as deduction while calculating total taxable income.

With the help of this guidelines you may make your Tax Planning for any assessment year under section 80C of the Income Tax Act, 1961. It describes about various tax saving investments and expenses to be made for claiming deduction under section 80C. Thereafter, you will come to know how much tax saving can be done through section 80C.

Table of Contents

Who is Eligible for Section 80C Deduction?

There are only two assessees who are eligible for claiming deduction under section 80C of the Income-tax Act, 1961. The first one is individual and the second one is Hindu Undivided Family (HUF). That means, 80C Deduction is available for resident individuals or non-resident individuals or Hindu undivided family.

In other words, Partnership Firm, Local Authority, Domestic Company, Foreign Company, Co-operative Society, Association of Person, Body of Individual and any other artificial juridical person shall not be eligible for income tax deduction 80C.

Income Tax Benefit of Section 80C for Assessment Year 2019-20

The deduction under section 80C would be available to eligible person irrespective of their income levels. In fact, those assessees whose total taxable income fall under higher income tax brackets can save @31.2% i.e. up to ₹46800 income tax.

Hence, if you are individual (resident or non-resident) or HUF, then you may save up to ₹46,800 as income tax benefit for each assessment year. This is because the maximum deduction under this section is limited to ₹1,50,000.

From the following table you will understand the exact income tax benefit from the section 80C.

Taxable Income Tax Saving Up to
₹2,50,000 to ₹5,00,000 ₹7,800
₹5,00,000 to ₹10,00,000 ₹31,200
Above ₹10,00,000 ₹46,800

Limit of 80C Tax Deduction for Assessment Year 2023-24

The amount of deduction under section 80C has been increased from ₹1,00,000 to ₹1,50,000 by the Finance (No. 2) Act, 2014, w.e.f. 1-4-2015. In other words, you may claim deduction up to ₹1.5 Lakh u/s 80C for financial year 2022-23 relating to assessment year 2023-24.

As per sub-section (1) of section 80C:

In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one hundred and fifty thousand rupees.

Investment/ Contributions/ Expenditure allowed as 80C Deduction

Both the assessees may deduct the aggregate of the amount paid or deposited in the previous year in respect of life insurance premium, deferred annuity, contribution to provident funds, subscription to deposit schemes, equity shares or debentures etc.

Accordingly, not only the investments and subscriptions but also the expenditure made during the previous year would qualify under this section. However, the aggregate amount of deduction made under section 80C shall not exceed One Lakh Fifty Thousand Rupees. Therefore, you may invest up to ₹1,50,000 in a financial year 2020-21 and save tax up to ₹46350 in assessment year 2021-22 under Section 80C of the Income Tax Act.

The following are the investments/contributions/expenditures eligible for deduction u/s 80C:

1) Life Insurance Premiums [80C(2)(i)]:

Most of tax payers pay premium of Life Insurance Policy made for their own life or the life of his/her family members securing the payment of specified sum on the stipulated date of maturity. Such premium amounts, irrespective of one or more insurance policies, shall be included in section 80C deduction.

In case of individuals, the deduction u/s 80C shall be allowed for any sum paid or deposited in the previous year towards Life Insurance Premium (LIP) for their own life or the life of wife or husband and on the life of any child (minor or major) of such individuals.

Thus, the LIP paid for the life of mother, father, brothers and sisters etc. is not eligible for deduction u/s 80C. However, in the case of a Hindu undivided family, the premium paid for the life of any HUF member shall be deducted under section 80C.

Note that insurance shall also include a policy of insurance for the benefit of a minor with the object of enabling the minor, after he has attained majority to secure insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf.

Policies issued on or after 1.4.2012:

As inserted by the Finance Act, 2012, w.e.f. 1-4-2013, the deduction under section 80C shall apply only to so much of any premium or other payment made on an insurance policy, other than a contract for a deferred annuity, issued on or after the 1st day of April, 2012 shall be restricted to the 10% of the actual sum assured.

However, earlier to the above amendment i.e. in respect of policies issued before 31-03-2012, the annual premium on insurance policies up to 20% of the actual capital sum assured was allowed as qualifying amount for 80C deduction.

Policies issued on or after 1.4.2013:

In accordance with the new proviso inserted in sub-section (3A) of section 80C by the Finance Act, 2013, w.e.f. 1-4-2014, following further benefits has been given for the premium paid in respect of a life insurance policy issued on or after 1st day of April, 2013:

Where the insurance policy is on life of any person, who is—

(a) A person with disability or a person with severe disability as referred to in section 80U, or
(b) Suffering from disease or ailment as specified in the rules made under section 80DDB,

the amount of LIP would qualify for deduction to the extent of 15% of the actual capital sum assured.

Thus, in respect of other policies, the deduction of premium paid would continue to be restricted to 10% of the actual capital sum assured.

Actual Capital Sum Assured in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy.

Note that the actual sum assured does not include

(i) The value of any premium agreed to be returned; or
(ii) 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.

2) LIC Annuity Plan [80C(2)(xii)]:

The deduction shall also be available u/s 80C if you have made contribution to any approved annuity plan of the Life Insurance Corporation (LIC) viz. i) New Jeevan Dhara, ii) New Jeevan Dhara I, iii) Jeevan Akshay and iv) New Jeevan Akshay I, II and III or any other insurer (Tata AIG Easy Retire Annuity Plan of Tata AIG Life Insurance Company Ltd.) as the Central Government may, by notification in the Official Gazette, specify in this behalf.

However, such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity.

3) Deferred Annuity Plan [80C(2)(ii)]:

Premium paid in previous year to effect or to keep in force a contract for a deferred annuity (except LIC Annuity Plan as discussed above) on the life of yourself, your spouse or your children. However, such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

The best part of this annuity pan is that such contract for a deferred annuity need not necessarily be with an insurance company and therefore such a contract can be entered into with any person.

4) Deferred Annuity Plan for Govt. Employees [80C(2)(iii)]:

Any amount deducted from the salary of a Government employee by or on behalf of the Government for the purpose of securing to him a deferred annuity or making provision for his spouse or children.

However, the sum so deducted does not exceed one-fifth of the salary i.e. the excess amount, if any, over 20% of the salary is to be ignored for the purpose of 80C deduction.

5) Provident Funds [80C(2)(iv) to (vii)]:

The deduction under section 80C shall be made for a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 applies or any provident fund set up by the Central Government i.e. the Public Provident Fund (PPF) established under the Public Provident Fund
Scheme, 1968 or a contribution by an employee to a Recognised Provident Fund (RPF) or an approved superannuation fund.

Actually, the Provident Fund is deducted directly from the salary of employees by their employers and such deducted amount deposited to a retirement account along with their employer’s contribution. The contribution made by employees is taken into account for 80C deduction whereas employer’s contribution is exempt from tax.

6) Govt. Deposit Schemes [80C(2)(viii)]:

As subscription to any such security of the Central Government or any such deposit scheme as that Government may, by notification in the Official Gazette, specify in this behalf.

Accordingly, the Central Government specifies the ‘Sukanya Samriddhi Account’ for the purposes of this clause vide Notification No. S.O. 210(E) dated 21st January, 2015.

7) Subscription to NSC[80C(2)(ix)]:

You can purchase any savings certificate defined under in clause (c) of section 2 of the Government Savings Certificates Act, 1959 and notified by the CG i.e. National Savings Certificate (VIII Issue), specify in this behalf.

8) Unit-linked Insurance Plan [80C(2)(x)]:

As a contribution in the name of yourself or husband or wife or any children for participation in the Unit-linked Insurance Plan, 1971 specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.

9) LIC Mutual Fund [80C(2)(xi)]:

As a contribution in the name of you or your spouse or your children for participation in any such unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10.

10) Subscription of Units of Mutual Fund [80C(2)(xiii)]:

Subscription to any units of any Mutual Fund referred in section 10(23D) or from the Administrator or the specified company under any plan formulated in accordance with such scheme as notified by the Central Government.

11) Contribution to Pension Fund of Mutual Fund [80C(2)(xiv)]:

Contribution to any pension fund set up by any Mutual Fund referred to in clause (23D) of section 10 or by the Administrator or the specified company, as the CG may, by notification in the Official Gazette, specify in this behalf.

12) NHB Term Deposit [80C(2)(xv)]:

Subscription to any deposit scheme or contribution to any pension fund set up by the National Housing Bank (NHB) i.e., NHB SUVRIDDHI (Tax Saving) Term Deposit Scheme, 2008. You are required to deposit a minimum of ₹10,000 under this scheme and higher in multiples thereof per financial year.

13) Deposit Scheme for Housing Purpose [80C(2)(xvi)]:

Subscription to any deposit scheme of a public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes or any authority constituted in India either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both as notified by the CG.

Note that the Central Government vide Notification No.2/2007 dated 11.1.2007 has already specified the Public Deposit Scheme of Housing and Urban Development Corporation Ltd. (HUDCO) for the purpose of deduction under section 80C.

14) Tuition Fees [80C(2)(xvii)]:

Amount paid as tuition fees whether at the time of admission or thereafter to any university, college, school or other educational institution situated within India for the purpose of full-time education.

Note that this benefit is only for the amount of tuition fees for full-time education and shall not include any payment towards development fees or donation or payment of similar nature and payment made for education to any institution situated outside India.

15) Repayment of Housing Loan [80C(2)(xviii)]:

If you had made a payment for the purposes of purchase or construction of a new residential house property. The income from such property must be chargeable to tax under the head “Income from house property”.

Such payments for the purpose of deduction under section 80C shall include the amount paid towards or by way of any instalment or part payment of the amount due or repayment of the amount borrowed by the assessee from:

  • the Central Government or any State Government; or
  • any bank, including a co-operative bank; or
  • the Life Insurance Corporation, or the National Housing Bank; or
  • any public company formed and registered in India; or
  • any company in which the public are substantially interested; or
  • any co-operative society engaged in the business of financing the construction of houses.

Further, the payment made for the stamp duty, registration fee and other expenses for the purpose of transfer of house property to the assessee can also be claimed as deduction under section 80C in the year of purchase of new residential house property.

However, such payment shall not include any payment towards or by way of the admission fee, cost of share and initial deposit for becoming shareholder or member or the cost of any addition or alteration to, or renovation or repair of the house property or any expenditure in respect of which deduction is allowable under the provisions of section 24.

16) Subscription to Equity or Debenture [80C(2)(xix):

Subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as subscription to any eligible issue of capital by any public financial institution in the prescribed form (i.e. Rule 20 and Form No. 59).

Eligible Issue of Capital means an issue made by an Indian public company or a public financial institution and the entire proceeds of the issue are utilised wholly and exclusively for the purposes of any business referred to in of section 80-IA(4).

17) Subscription to Mutual Fund Units [80C(2)(xx)]:

Subscription to any units of any mutual fund referred to section 10(23D) and approved by the Board on an application made by such mutual fund in the prescribed form (See rule 20A and Form No. 59A):

Provided the amount of subscription to such units is subscribed only in the Eligible Issue of Capital (as discussed above) of any company.

18) Term Deposit [80C(2)(xxi)]:

Any amount paid for term deposit for a fixed period of not less than five years with a scheduled bank and which is in accordance with a scheme framed and notified by the Central Government.

Scheduled bank means the State Bank of India (SBI) or its subsidiary bank or any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934.

19) Subscription to Bond [80C(2)(xxii)]:

Subscription to bonds issued by the National Bank for Agriculture and Rural Development.

20) Senior Citizens Savings Scheme[80C(2)(xxiii)]:

Amount deposited in account under the Senior Citizens Savings Scheme Rules, 2004.

21) Post Office Time Deposit[80C(2)(xxiv)]:

You may open 1 year, 2 Year, 3 Year or 5 Year time deposit account under the Post Office Time Deposit Rules, 1981. But, only 5-year post-office time deposit account shall qualify for deduction under section 80C.

Section-80C: Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.

Section 80C(1) of Income Tax Act

In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one hundred and fifty thousand rupees.

Section 80C(2) of Income Tax Act

The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee—

  • (i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4);
  • (ii) to effect or to keep in force a contract for a deferred annuity, not being an annuity plan referred to in clause (xii), on the life of persons specified in sub-section (4):

    Provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;
  • (iii) by way of deduction from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum so deducted does not exceed one-fifth of the salary;
  • (iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies;
  • (v) as a contribution to any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of any person specified in sub-section (4);
  • (vi) as a contribution by an employee to a recognised provident fund;
  • (vii) as a contribution by an employee to an approved superannuation fund;
  • (viii) as subscription, in the name of any person specified in sub-section (4), to any such security of the Central Government or any such deposit scheme as that Government may, by notification in the Official Gazette, specify in this behalf;
  • (ix) as subscription to any such savings certificate as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (x) as a contribution, in the name of any person specified in sub-section (4), for participation in the Unit-linked Insurance Plan, 1971 (hereafter in this section referred to as the Unit-linked Insurance Plan) specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
  • (xi) as a contribution in the name of any person specified in sub-section (4) for participation in any such unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (xii) to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;
  • (xiii) as subscription to any units of any Mutual Fund referred to in clause (23D) of section 10 or from the Administrator or the specified company under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (xiv) as a contribution by an individual to any pension fund set up by any Mutual Fund referred to in clause (23D) of section 10 or by the Administrator or the specified company, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (xv) as subscription to any such deposit scheme of, or as a contribution to any such pension fund set up by, the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987) (hereafter in this section referred to as the National Housing Bank), as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (xvi) as subscription to any such deposit scheme of—
    • (a) a public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes; or
    • (b) any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both,

      as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (xvii) as tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter,—
    • (a) to any university, college, school or other educational institution situated within India;
    • (b) for the purpose of full-time education of any of the persons specified in sub-section (4);
  • (xviii) for the purposes of purchase or construction of a residential house property the income from which is chargeable to tax under the head “Income from house property” (or which would, if it had not been used for the assessee’s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of—
    • (a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or
    • (b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or
    • (c) repayment of the amount borrowed by the assessee from—
      • (1) the Central Government or any State Government, or
      • (2) any bank, including a co-operative bank, or
      • (3) the Life Insurance Corporation, or
      • (4) the National Housing Bank, or
      • (5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or
      • (6) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or
      • (7) the assessee’s employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or
      • (8) the assessee’s employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society; or
    • (d) stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the assessee,

      but shall not include any payment towards or by way of—
      • (A) the admission fee, cost of share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or
      • (B) the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out; or
      • (C) any expenditure in respect of which deduction is allowable under the provisions of section 24;
  • (xix) as subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as subscription to any eligible issue of capital by any public financial institution in the prescribed form.

    Explanation: For the purposes of this clause,—
    (i) “eligible issue of capital” means an issue made by a public company formed and registered in India or a public financial institution and the entire proceeds of the issue are utilised wholly and exclusively for the purposes of any business referred to in sub-section (4) of section 80-IA;
    (ii) “public company” shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956);
    (iii) “public financial institution” shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);
  • (xx) as subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board on an application made by such mutual fund in the prescribed form:

    Provided that this clause shall apply if the amount of subscription to such units is subscribed only in the eligible issue of capital of any company.

    Explanation: For the purposes of this clause “eligible issue of capital” means an issue referred to in clause (i) of the Explanation to clause (xix) of sub-section (2);
  • (xxi) as term deposit—
    • (a) for a fixed period of not less than five years with a scheduled bank; and
    • (b) which is in accordance with a scheme framed and notified, by the Central Government, in the Official Gazette for the purposes of this clause.

      Explanation: For the purposes of this clause, “scheduled bank” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank, being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);
  • (xxii) as subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
  • (xxiii) in an account under the Senior Citizens Savings Scheme Rules, 2004;
  • (xxiv) as five year time deposit in an account under the Post Office Time Deposit Rules, 1981;
  • (xxv) being an employee of the Central Government, as a contribution to a specified account of the pension scheme referred to in section 80CCD
    • (a) for a fixed period of not less than three years; and
    • (b) which is in accordance with the scheme as may be notified by the Central Government in the Official Gazette for the purposes of this clause.

      Explanation: For the purposes of this clause, “specified account” means an additional account referred to in sub-section (3) of section 20 of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013).]

Section 80C(3) of Income Tax Act

The provisions of sub-section (2) shall apply only to so much of any premium or other payment made on an insurance policy, other than a contract for a deferred annuity, issued on or before the 31st day of March, 2012, as is not in excess of twenty per cent of the actual capital sum assured.

Explanation: In calculating any such actual capital sum assured, no account shall be taken—

  • (i) of the value of any premiums agreed to be returned, or
  • (ii) 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.

Section 80C(3A) of Income Tax Act

The provisions of sub-section (2) shall apply only to so much of any premium or other payment made on an insurance policy, other than a contract for a deferred annuity, issued on or after the 1st day of April, 2012 as is not in excess of ten per cent of the actual capital sum assured :

Provided that where the policy, issued on or after the 1st day of April, 2013, is for insurance on life of any person, who is—

  • (a) a person with disability or a person with severe disability as referred to in section 80U, or
  • (b) suffering from disease or ailment as specified in the rules made under section 80DDB,

the provisions of this sub-section shall have effect as if for the words “ten per cent”, the words “fifteen per cent” had been substituted.

Explanation: For the purposes of this sub-section, “actual capital sum assured” in relation to a life insurance policy shall 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—

  • (i) the value of any premium agreed to be returned; or
  • (ii) 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.

Section 80C(4) of Income Tax Act

The persons referred to in sub-section (2) shall be the following, namely:—

(a) for the purposes of clauses (i), (v), (x) and (xi) of that sub-section,—

  • (i) in the case of an individual, the individual, the wife or husband and any child of such individual, and
  • (ii) in the case of a Hindu undivided family, any member thereof;

(b) for the purposes of clause (ii) of that sub-section, in the case of an individual, the individual, the wife or husband and any child of such individual;

(ba) for the purposes of clause (viii) of that sub-section, in the case of an individual, the individual or any girl child of that individual, or any girl child for whom such person is the legal guardian, if the scheme so specifies;

(c) for the purposes of clause (xvii) of that sub-section, in the case of an individual, any two children of such individual.

Section 80C(5) of Income Tax Act

Where, in any previous year, an assessee—

(i) terminates his contract of insurance referred to in clause (i) of sub-section (2), by notice to that effect or where the contract ceases to be in force by reason of failure to pay any premium, by not reviving contract of insurance,—

  • (a) in case of any single premium policy, within two years after the date of commencement of insurance; or
  • (b) in any other case, before premiums have been paid for two years; or

(ii) terminates his participation in any unit-linked insurance plan referred to in clause (x) or clause (xi) of sub-section (2), by notice to that effect or where he ceases to participate by reason of failure to pay any contribution, by not reviving his participation, before contributions in respect of such participation have been paid for five years; or

(iii) transfers the house property referred to in clause (xviii) of sub-section (2) before the expiry of five years from the end of the financial year in which possession of such property is obtained by him, or receives back, whether by way of refund or otherwise, any sum specified in that clause,

then,—

  • (a) no deduction shall be allowed to the assessee under sub-section (1) with reference to any of the sums, referred to in clauses (i), (x), (xi) and (xviii) of sub-section (2), paid in such previous year; and
  • (b) the aggregate amount of the deductions of income so allowed in respect of the previous year or years preceding such previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

Section 80C(6) of Income Tax Act

If any equity shares or debentures, with reference to the cost of which a deduction is allowed under sub-section (1), are sold or otherwise transferred by the assessee to any person at any time within a period of three years from the date of their acquisition, the aggregate amount of the deductions of income so allowed in respect of such equity shares or debentures in the previous year or years preceding the previous year in which such sale or transfer has taken place shall be deemed to be the income of the assessee of such previous year and shall be liable to tax in the assessment year relevant to such previous year.

Explanation: A person shall be treated as having acquired any shares or debentures on the date on which his name is entered in relation to those shares or debentures in the register of members or of debenture-holders, as the case may be, of the public company.

Section 80C(6A) of Income Tax Act

If any amount, including interest accrued thereon, is withdrawn by the assessee from his account referred to in clause (xxiii) or clause (xxiv) of sub-section (2), before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the assessee of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year:

Provided that the amount liable to tax shall not include the following amounts, namely:—

  • (i) any amount of interest, relating to deposits referred to in clause (xxiii) or clause (xxiv) of sub-section (2), which has been included in the total income of the assessee of the previous year or years preceding such previous year; and
  • (ii) any amount received by the nominee or legal heir of the assessee, on the death of such assessee, other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year.

Section 80C(7) of Income Tax Act

For the purposes of this section,—

  • (a) the insurance, deferred annuity, provident fund and superannuation fund referred to in clauses (i) to (vii);
  • (b) unit-linked insurance plan and annuity plan referred to in clauses (xii) to (xiiia);
  • (c) pension fund and subscription to deposit scheme referred to in clauses (xiiic) to (xiva);
  • (d) amount borrowed for purchase or construction of a residential house referred to in clause (xv),

of sub-section (2) of section 88 shall be eligible for deduction under the corresponding provisions of this section and the deduction shall be allowed in accordance with the provisions of this section.

Section 80C(8) of Income Tax Act

In this section,—

(i) “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);

(ii) “contribution” to any fund shall not include any sums in repayment of loan;

(iii) “insurance” shall include—

  • (a) a policy of insurance on the life of an individual or the spouse or the child of such individual or a member of a Hindu undivided family securing the payment of specified sum on the stipulated date of maturity, if such person is alive on such date notwithstanding that the policy of insurance provides only for the return of premiums paid (with or without any interest thereon) in the event of such person dying before the said stipulated date;
  • (b) a policy of insurance effected by an individual or a member of a Hindu undivided family for the benefit of a minor with the object of enabling the minor, after he has attained majority to secure insurance on his own life by adopting the policy and on his being alive on a date (after such adoption) specified in the policy in this behalf;

(iv) “Life Insurance Corporation” means the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956);

(v) “public company” shall have the same meaning as in section 3 of the Companies Act, 1956 (1 of 1956);

(vi) “security” means a Government security as defined in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944);

(vii) “specified company” means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);

(viii) “transfer” shall be deemed to include also the transactions referred to in clause (f) of section 269UA.

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