Many question arise about "can we take benefit of paying service tax Paid on Insurance Premium!" If we check insurance Premium receipts properly we get that the we pay three cost heads; Net Premium + Service Tax + E. Cess. On this basis final gross premium is calculated.
Now question is "can we take claim under section 80C of service tax paid along with insurance premium?"
The current tax rules states that "any amount paid to keep in force a life insurance policy qualifies for a tax deduction under section 80C." It is a common perception that Premium Paid all Life Insurance Policies are qualifies for deduction under section 80C of Income Tax Act, 1961.
As per Section 80C(2) of the Income Tax Act, 1961 any amount paid to an insurer to buy or to keep a life insurance policy in force can be claimed as a deduction from gross total income by the policy holder. This implies that premium paid for a life insurance policy can be deducted from gross total income before arriving at taxable income subject to certain condition.
Section 80C(2) also clarifies that in order to claim the deduction from gross total income fro a particular year the gross amount of premium must be paid or deposited in that particular financial year itself.
But when you ask insurance provider to provide Total Insurance Premium Paid Statement then they will provide you only statement of net premium paid.
Tax experts interpret this to mean that the entire premium inclusive Service Tax and Cess, qualifies for a tax deduction.
Ideally, you need to mention the entire premium or gross premium for the purpose of availing a tax deduction under section 80C.
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