Upon exhausting the tax rebate by the insured, let's understand if the spouse is eligible to claim tax benefits on the LIC premium
Let's assume that you're paying a certain amount as a premium for an LIC policy that insures yourself, and you have crossed the limit of Rs 1.5 lakh tax rebate. Now, you're not claiming this premium but can your spouse take a tax benefit on this premium? Let's understand.
Section 80C of the Income Tax Act provides a deduction of up to Rs 1.5 lakh for the premiums paid on life insurance. Deductions are available for the policy taken by yourself or in the name of your spouse or children. No other deductions are available for premium paid if the policy is in the name of any person other than yourself, your spouse and your children.
Yes, either the insured or the spouse can claim the benefits for the premiums paid by the other. For example, if the husband has paid the premium, the wife can claim deductions while filing for tax and vice versa. But only one can claim it for a particular year. They can claim tax benefits by providing the payment receipt or they can visit the nearest insurance company office and ask for an income tax certificate on their policy.
It has to be noted that deductions are restricted to 20 per cent of the capital sum assured with policies issued on or before March 31, 2012 and 10 per cent in case of policies issued on or after April 1, 2012.
For example, if your policy was issued in 2015 and the sum assured was Rs 50,000 and you paid a premium of Rs 15,000. Only the 10 per cent of the sum assured, that is, Rs 5,000 (Rs 50,000 x 10 per cent) out of Rs 15,000 can be claimed for a tax deduction.