Nov 23, 2009

Holding Time Limit for Claiming Deduction u/s 80C on Investments

In respect of the some investments/deposits eligible for deduction under section 80C, in some cases , the law provides a minimum period of holding for claiming deduction u/s 80C otherwise it will be taxable. Such cases are given below-
Time Limit for qualifying deduction u/s 80C
 Unit- Linked insurance plan (ULIP) – 5 years
 Life Insurance Premium – 2 years
 Cost of Purchase/ Construction of a residential House property including repayment of Loan – 5 Years
 Deposit under senior citizen saving scheme – 5 Years
 Time deposit in post office – 5 Years
In the case of withdrawal before 5 years by the depositor during his lifetime from amount deposit under
 Senior Citizen Saving Scheme
 Time deposit in Post Office
 The amount withdrawn (excluding interest which has already been taxed in earlier year) will be taxable in the year of withdrawal.
In the case of
 Unit- Linked insurance plan (ULIP)
 Life –Insurance Premium
 Cost of purchase/construction of a residential house property including repayment of loan
 Any contribution made towards the above plan in the said previous year will not be qualified for deduction u/s 80C
 The quantum of deduction already taken in the preceding years would be deemed as income of the taxpayer in the year in which contribution to the plan is terminated.
Important Notes for claiming deduction u/s 80C
 The above deductions are available only on payment basis.
 It may be noted that the aggregate amount of deduction u/s 80C, 80CCC and 80CCD cannot exceed Rs. 1,00,000/-

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