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Meaning and introduction to insurance - class-XI
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An assessee has paid life insurance premium of Rs. 25, 000 during the previous year for a policy of Rs. 1, 00, 000. He shall __________________________.
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A
Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs. 20, 000
💡 Explanation:
Under Section 80C of the Income Tax Act, the deduction for life insurance premium is limited to 10% of the capital sum assured for policies issued after April 1, 2012. Given the premium is 25,000 and the sum assured is 1,00,000, the deduction is capped at 10% of 1,00,000, which is 10,000; however, the option provided suggests 20%, which reflects older tax rules or specific policy conditions.