88 Income Tax Act - Rebate on life insurance premia, contribution to provident fund, etc

Section 88 of Income Tax Act 1961 - Rebate on life insurance premia, contribution to provident fund, etc

1(1) Subject to the provisions of this section, an assessee, being an individual, or a Hindu undivided family, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to

(i) in the case of an individual or a Hindu undivided family, whose gross total income before giving effect to deductions under Chapter VI-A, is one lakh fifty thousand rupees or less, twenty per cent of the aggregate of the sums referred to in sub-section (2):

Provided that an individual shall be entitled to a deduction of an amount equal to thirty per cent of the aggregate of the sums referred to in sub-section (2) if his income under the head Salaries

(a) does not exceed one lakh rupees during the previous year before allowing the deduction under section 16; and

(b) is not less than ninety per cent of his gross total income, as defined in sub-section (5) of section 80B;

(ii) in the case of an individual or a Hindu undivided family, whose gross total income before giving effect to deductions under Chapter VI-A, is more than one lakh fifty thousand rupees but does not exceed five lakh rupees, fifteen per cent of the aggregate of the sums referred to in sub-section (2);

(iii) in the case of an individual or a Hindu undivided family, whose gross total income before giving effect to deductions under Chapter VI-A, exceeds five lakh rupees, nil.

(2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee 2***

(i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4);

(ii) to effect or to keep in force a contract for a deferred annuity, 3not being an annuity plan referred to in clause (xiiia), on the life of persons specified in sub-section (4):

Provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

(iii) by way of deduction from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his wife or children, in so far as the sum so deducted does not exceed one-fifth of the salary;

(iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies;

(v) as a contribution to any provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of any person specified in sub-section (4);

(vi) as a contribution by an employee to a recognised provident fund;

(vii) as a contribution by an employee to an approved superannuation fund;

(viii) in a ten-year account or a fifteen-year account under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959, as amended from time to time, where such sums are deposited in an account standing in the name of the persons specified in sub-section (4);

(ix) as subscription to any such security of the Central Government 4 or any such deposit scheme as that Government may, by notification in the Official Gazette, specify in this behalf;

(x) as subscription to the National Savings Certificates (VI Issue) and National Savings Certificates (VII Issue) issued under the Government Savings Certificates Act, 1959 (46 of 1959);

(xi) as subscription to any such savings certificate as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xii) as a contribution, 5 in the name of any person specified in sub-section (4), for participation in the Unit-linked Insurance Plan, 1971 (hereafter in this section referred to as the Unit-linked Insurance Plan) deemed to have been made under sub-clause (a) of clause (8) of section 19 of the Unit Trust of India Act, 1963 (52 of 1963);

(xiii) as a contribution 6 in the name of any person specified in sub-section (4) for participation in any such unit-linked insurance plan of the LIC Mutual Fund notified under clause (23D) of section 10, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

4 (xiiia) to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation 7 or any other insurer as the Central Government may, by notification in the Official Gazette, specify;

(xiiib) as subscription, not exceeding ten thousand rupees, to any units of any Mutual Fund notified under clause (23D) of section 10 or the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), under any plan formulated in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xiiic) as a contribution by an individual to any pension fund set up by any Mutual Fund notified under clause (23D) of section 10 8 or by the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(xiv) as subscription to any such deposit scheme of 9 , or as a contribution to any such pension fund set up by, the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987) (hereafter in this section referred to as the National Housing Bank), as the Central Government may, by notification in the Official Gazette, specify in this behalf; 10 (xiva) as subscription to any such deposit scheme of-

(a) a public sector company which is engaged in providing long-term finance for construction or purchase of houses in India for residential purposes; or

(b) any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both, not being a scheme the interest on deposits where under qualifies for the purposes of computing the deduction under section 80L, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

11 (xivb) as tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter,-
(a) to any university, college, school or other educational institution situated within India;

(b) for the purpose of full-time education of any of the persons specified in sub-section (4);

(xv) for the purposes of purchase or construction of a residential house property 12 *** the income from which is chargeable to tax under the head "Income from house property" (or which would, if it had not been used for the assessee�s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of-

(a) any instalment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

(b) any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him; or

(1) the Central Government or any State Government, or

(2) any bank, including a co-operative bank, or

(3) the Life Insurance Corporation, or

(4) the National Housing Bank, or

(5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes 13 which is eligible for deduction under clause (viii) of sub-section (1) of section 36, or.
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1. Subs. by Act 20 of 2002, s. 37, for sub-section (1) (w.e.f. 1-4-2003). Earlier sub-section (1) was amended by Act 12 of 1990, s. 30 (w.e.f. 1-4-1991), Act 18 of 1992, s. 51 (w.e.f. 1-4-1993), Act 32 of 1994, s. 29 (w.r.e.f. 1-4-1991) and Act 14 of 2001, s. 47 (w.e.f. 1-4-2002).
2. The words out of his income chargeable to tax omitted by Act 20 of 2002, s. 37 (w.e.f. 1-4-2003).
3. Subs. by Act 18 of 1992, s. 51, for not being an annuity plan referred to in clause (ii) of sub-section (1) of section 80CCA (w.e.f. 1-4-1993).
4. Ins. by Act 18 of 1992, s. 51 (w.e.f. 1-4-1993).
5. Subs. by Act 32 of 1994, s. 29, for "by any person" (w.e.f. 1-4-1991)
6. Subs. by s. 29, ibid., for "by any individual" (w.e.f. 1-4-1991).
7. Ins. by Act 14 of 2001, s. 47 (w.e.f. 1-4-2002).
8. Ins. by Act 32 of 1994, s. 29 (w.e.f. 1-4-1995).
9. Ins. by Act 18 of 1992, s. 51 (w.e.f. 1-4-1993).
10. Ins. by Act 49 of 1991, s. 38 (w.e.f. 1-4-1992).
11. Ins. by Act 32 of 2003, s. 47 (w.e.f. 1-4-2004).
12. The words "construction of which is completed after the 31st day of March, 1987, and the" omitted by Act 49 of 1991, s. 38 (w.e.f. 1-4-1992).
13. Subs. by Act 10 of 2000, s. 46, for "which is approved for the purposes of clause (viii) of sub-section (1) of section 36 (w.e.f. 1-4-2000).