492. Whether the Karnataka Government Servants’ monthly contributions under Karnataka State Employees’ Group Insurance Scheme at a low cost and on a wholly contributory and self-financing basis would be eligible for deduction under section 80C

1. The Government of Karnataka has introduced Karnataka State Employees’ Group Insurance Scheme at a low cost and on a wholly contributory and self-financing basis for giving the twin benefits of an insurance cover to help their nominees in the event of death in service and a lump sum payment to augment their resources on retirement.

2. A question has been raised whether the Karnataka Government Servants’ monthly contributions under the Scheme would be eligible for deduction under section 80C(2)(a)( i) of the Income-tax Act, 1961. It is clarified that the contributions to the Karnataka State Government Employees’ Group Insurance Scheme, 1981 will be eligible for relief under section 80C of the Income-tax Act, 1961 subject to the limit as prescribed in section 80C(4) of the Income-tax Act, 1961.

Circular : No. 518, dated 9-8-1988.

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