Deduction of Insurance Premium Under Section 80C
We know that insurance Policy Premiums are eligible to get deduction of Premiums paid up to the limit of 1.5 Lac under Section 80C of Income Tax Act 1961.
Is the whole amount of Premium paid can claimed under section 80C, For getting answer of this question lets take some different Situations ?
Situation No.1: Policy Premium: – 20000, Sum Assured: 250000
(Whole Premium of 20000 Can be Claimed under section 80C as amount of
premium which can be claimed should not be more than 10% of sum assured,
here the premium paid is even less than 10% so whole 20000 Can be Claimed)
Situation No.2: Policy Premium: – 50000, Sum Assured: 500000
(Whole Premium of 50000 Can be Claimed as premium amount claimed should
not be more than 10% of sum assured, here premium is exactly equal to 10% of Sum Assured, hence whole 50000 Can be Claimed)
Situation No.3: Policy Premium: – 25000, Sum Assured: 200000
(In this Case Maximum up to 10% of sum assured premium can be claimed as
deduction, so only (200000*10%) = 20000 is eligible to get deduction under section 80C,Rest 5000 Can not be claimed for deduction)
So, Your amount of actual deduction of Insurance Premium will depend on the Sum Assured against the Premium Paid in your policy.
Applicable on all Policies issued after 1 St April 2012 as per Income Tax Act 1961.