Deduction u/s 80 C for Investments of Family Members

Friends, 

            Every person invest money under section 80 C and avail  benefit of  savings.  It is general question that the benefit of investments made in the name of his/her family under section 80C can be availed or not.  At the end of Financial Year, many time assessee find that the  investments u/s 80C have been made in the name of his/her major child or wife or brother  and now assessee has no more money to invest in his/her name.   In this stage he/she wants to take benefit of investments made in the name of his/her family.  Common questions for an assessee are given as under :-

• Eligibility for Payment of LIC premium of major child.
• Deduction u/s 80 C for payment on behalf of my wife/husband.
• Limit of deduction u/s 80C.

An individual can avail the benefit of deduction under section 80C for payment of investments on behalf of his/her family members (individual/Spouse/Children) up to Rs. 1,00,000/- (one lakh only. )

1. ULIP
2. Life Insurance Premimum
3. Public Provident Fund
4. Annuity Plans

ULIP

ULIP should be taken on his own life, life of the spouse or any child.

Important Notes:

• Hindu Undivided Family (HUF) can also avail the deduction u/s 80C for investment on the name of any      member of the family.

Child may be

• Dependent/independent,
• Male/female,
• Minor/major,
• Married/unmarried

Example for life insurance Premium paid for family members

Compute the eligible deduction u/s 80C for payment by a on behalf of his family members as following

1. LIP (Life Insurance Premium) on his own life – Rs. 20000/-
2. LIP on the life of his wife – Rs. 30000/-
3. LIP on the life of his major son (Not Dependent on A) – Rs. 40000/-
4. LIP on the life of his dependent brother – Rs. 5000/-

Amount eligible for deduction u/s 80C will be Rs. 90000 (20000+30000+40000) except LIP on the life of his dependent brother.

Life Insurance Premium

In case of an individual policy should be taken on his own life, of the spouse or any child.

Public Provident Fund (PPF)

An individual can open public provident fund account in his own name or in the name of minor of whom he is the guardian. One can get the deduction u/s 80c, deposit in his own account, or his/her spouse or in the account of his /her children.

• Important Note: Under Public Provident Fund (PPF) the maximum contribution is Rs. 70,000/-

Annuity Plan

Annuity plan should be taken in the name of the individual, his wife/her husband on any child of such individual.