Circular No. 574

493. Whether deduction is available in respect of premia paid on the life insurance policies on the lives of adult children, irrespective of their status; for example, premia paid on a policy on the life of a married daughter

What this is

Circular No. 574 was issued by the Central Board of Direct Taxes on 22 August 1990. Its subject is 493. Whether deduction is available in respect of premia paid on the life insurance policies on the lives of adult children, irrespective of their status; for example, premia paid on a policy on the life of a married daughter.

What it does

Confirms that deduction under section 80C for life insurance premia is available on a policy on the life of any child of the assessee, whatever the child's age or status, so a premium on a policy on the life of a married daughter qualifies. The Board notes that section 80C allows sums paid by an individual out of income chargeable to tax to effect or keep in force an insurance on the life of the assessee, the spouse or any child, and puts no age or status condition on the child. It adds that the same relief will continue under the new section introduced by the Finance Act, 1990, because that section is in pari materia with section 80C.

Why it was issued

Representations had been received asking whether relief was available on premia paid on policies on the lives of adult children irrespective of their status, the example given being a married daughter.

Who it reaches

Parents paying premia on policies on the lives of adult or married children
Assessing Officers disallowing such premia on the ground of the child's status
Advisers computing the deduction

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.80C	s.2, s.123

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

493. Whether deduction is available in respect of premia paid on the life insurance policies on the lives of adult children, irrespective of their status; for example, premia paid on a policy on the life of a married daughter
1. Section 80C of the Income-tax Act allows, inter alia, deductions while computing the total income of an assessee of any sums paid in the previous year by the assessee individual out of his income chargeable to tax, to effect or to keep in force an insurance on the life of the assessee or on the life of the wife, or husband, or any child of the assessee. Representations have been received by the Board regarding the availability of relief under this section in respect of premia paid on the life insurance policies on the lives of adult children, irrespective of their status; for example, premia paid on a policy on the life of a married daughter.
2. It is hereby clarified that relief under the said sections is available in respect of such cases also. This relief will continue to be available under the new section, introduced by the Finance Act, 1990, as the language of the new section is in pari materia with that of section 80C of the Act.
Circular : No. 574, dated 22-8-1990.

What to watch

The premium must be paid by the assessee out of his own income chargeable to tax.
The circular says nothing about who owns the policy or who receives the proceeds; it speaks only of the life insured.
It reads across to the section introduced by the Finance Act, 1990, on the footing that the language is in pari materia, so the point applies to whichever of the two provisions governs the year.
The deduction provisions for life insurance premia have been renumbered and rewritten since, so identify the section in force for the year in issue.

Where you meet it

In an assessment where the deduction claimed for insurance premia on a married child's policy is disallowed.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 134/2021 [F. No. 178/4/2021-ITA-I] / SO 5056(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 6 December 2021
Notification No. 45/2020 [F. No.370142/26/2019-TPL] / SO 2232(E) — Ministry of Finance 7 July 2020
Notification No.91/2015 [F.No.178/21/2014-ITA.I] / SO 3313(E) — jftLVªh laö Mhö ,yö&33004@99 REGD. NO. D. L.-33004/99 8 December 2015
Circular No. 19/2015 — Circular No.- 19 /2015 27 November 2015
Circular 1/2015 — Explanatory notes to the provisions of the finance no.2 act 2014 21 January 2015
Notification No. 9/2015 [F.No.178/3/2015-ITA-I]/SO 210(E) — Section 80C of the Income-tax Act, 1961 - Deductions - in Respect of Insurance Premium, ETC. - Notified Plan under secti 21 January 2015

← Circular No. 576 · Circular No. 573 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.