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Home / Insurance & Tax

Provisions of Section 88

Section 88 of the Income Tax Act and Life Insurance policies

In order to derive maximum advantage of Rebates against Section 88 of the Income Tax Act, you should carefully peruse the relevant provisions and plan your savings portfolio accordingly.

The gross qualifying amount under Section 88 is the aggregate amount also includes:

• Life Insurance premium paid by a person to effect or to keep in force a life insurance policy. The insurance policy can be taken on the life of an individual, his or her spouse or any major / minor child of the individual (irrespective of marital status) in the case of HUF, any member of the HUF
  
  
• Payment by a person in respect of non-commutable deferred annuity
  
  
• Any sum deducted from the salary payable by or on behalf of the government to an individual for securing a Deferred Annuity policy and making a provision for his wife or children provided the amount so deducted does not exceed 20 percent of the salary
  
  
• Any amount paid To effect or to keep in force a contract for such annuity plan of LIC. Presently Jeevan Dhara and Jeevan Akshay are such notified schemes.
  
  
• Contribution by an individual towards an approved Superannuation Fund. 

It may be noted that 

• where an assessee terminates his contract of life insurance or does not pay premiums and policy ceases to be in effect, within 2 years of date of commencement of insurance then no deduction be allowed to the assessee in such previous year; and the aggregate amount of the deductions of income tax allowed in a previous year shall be deemed to be tax payable by the assessee in such year of termination.

Click here to see the special provisions made by LIC for handicapped dependants of insurance policyholders.

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