Section 123 - Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc
An individual or HUF can claim qualifying payments listed in Schedule XV, within an overall ceiling of ₹1.5 lakh. The Schedule, not only section 123, determines eligible persons, instruments, lock-ins, insurance-premium limits, housing payments and later claw-back events.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current-law control
This page uses the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026. Earlier years and saved proceedings remain subject to the repeal-and-savings framework.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
An individual or HUF can claim qualifying payments listed in Schedule XV, within an overall ceiling of ₹1.5 lakh. The Schedule, not only section 123, determines eligible persons, instruments, lock-ins, insurance-premium limits, housing payments and later claw-back events.
Who should use this section
Individuals/HUFs or other persons falling within the eligibility wording of this personal-payment deduction; status and payment conditions must be checked for the tax year This applicability note is specific to section 123.
Old-law bridge
1961 Act sections 80C, 80CCC and 80CCE
The bridge is navigational only. A 1961 Act case or rule is carried forward only after checking wording, transition provisions and the current 2025 Act text.
Professional alert
Exception / professional alert Do not treat every investment marketed as tax-saving as Schedule XV eligible. Verify the notified scheme, beneficiary, payment date, lock-in and claw-back rules.
Connected Income-tax Rules, 2026 and Forms
No provision-specific Rule/Form is independently mapped in this tranche. General return, procedure and evidence rules can still apply.
Worked application
An individual pays ₹90,000 recognised provident fund contribution, ₹40,000 eligible tuition fees and ₹60,000 qualifying housing-loan principal. The eligible pool is ₹1.90 lakh, but section 123 restricts the deduction to ₹1.50 lakh.
Evidence / compliance checklist
- For section 123, retain proof of payment and the instrument/recipient document that establishes statutory eligibility.
- Match beneficiary, ownership/residency/status conditions to the text for the relevant tax year (section 123: Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.).
- Preserve certificate/approval/registration details where the deduction depends on an approved institution or authority (section 123: Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.).
- Keep a computation showing the statutory ceiling, qualifying base and any cash/payment-mode restriction (section 123: Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.).
Common mistake
Claiming section 123 from a payment receipt alone without testing the statutory ceiling, recipient/instrument eligibility, payment mode and required certificate.
Recommended approach
For section 123, fix the governing tax year, identify the operative sub-section for “Deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.”, trace every amount to evidence, apply only verified Rule/Form links, and retain a computation that another reviewer can reproduce from the primary source.
Thresholds, periods and timing checkpoints
- of the whole of the amount paid or deposited in the tax year, being the aggregate of the sums enumerated in Schedule XV, as does not exceed ₹ 150000, while
- computing the total income for that year, subject to the conditions specified in that
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 123 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 123 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 123 of the Income-tax Act, 2025 cover?
Section 123 covers deduction for life insurance premia, deferred annuity, contributions to provident fund, etc.. The operative result depends on the exact statutory conditions shown on this page and applies from 1 April 2026, subject to transition/savings provisions.
Who should check section 123?
Individuals/HUFs or other persons falling within the eligibility wording of this personal-payment deduction; status and payment conditions must be checked for the tax year This applicability note is specific to section 123.
Are there specific Rules or Forms for section 123?
No provision-specific Rule/Form independently mapped in this tranche.