Amendment of section 80C.
24. In section 80C of the Income-tax Act, with effect from the 1st day of April, 2013,—
(i) in sub-section (3), for the words “insurance policy other than a contract for a deferred annuity”, the words, figures and letters “insurance policy, other than a contract for a deferred annuity, issued on or before the 31st day of March, 2012,” shall be substituted;
(ii) after sub-section (3), the following shall be inserted, namely:—
‘(3A) 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.
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.’.
Notes on Clauses:
Clause 24 of the Bill seeks to amend section 80C of the Income-tax Act relating to deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.
The existing provisions of sub-section (3) of the aforesaid section 80C provide that 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 as is not in excess of twenty per cent. of the actual capital sum assured.
It is proposed to amend the aforesaid section so as to restrict the deduction for insurance policies issued on or after 1st April, 2012 to any premium or other payment made on such insurance policy as is not in excess of ten per cent. of the actual capital sum assured.
It is further proposed to define the expression “actual capital sum assured”.
These amendments will take effect from 1st April, 2013, and will, accordingly, apply in relation to the assessment year 2013-2014 and subsequent assessment years.
