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Section 80CCC of the Income Tax Act enables people with income tax deductions for contributions made by them towards particular pension funds from life insurance. The deduction is within Section 80C
Section 80CCC of the Income Tax Act of 1961 allows tax deductions on annuity plans from the Life Insurance Corporation of India (LIC) and other insurers. The maximum amount of deduction under Section 80CCC of the income tax act is Rs. 1.5 Lakhs.
About Section 80CCC Of The Income Tax Act
The Section 80CCC deduction limit includes the expenditure on the purchase of a new policy or payments made towards the renewal or continuance of an existing policy. The compulsory condition for this deduction is that the policy on which the money is spent must provide a pension or periodical annuity.
The primary condition for availing of this deduction is that the policy for which the money has been spent must be providing a pension or a periodical annuity.
All taxpayers are not eligible to claim an deduction under Section 80CCC of the Income Tax Act of India, 1961. Here are some of the terms and conditions that must be satisfied to avail deduction.
Section 80C enables a decrease in taxable income by making tax-saving deposits or incurring eligible expenses.
Section 80CCC – Pension Contribution Insurance Premium /Section 80CCD
80C enables deduction benefit for the investment made in the following:
80CCC enables deduction benefit for payment made towards:
All these are taxable in the year of receipt.
Employee’s contribution under section 80CCD (1). The maximum deduction is capped at the lowest amount among the following
The provisions under Section 10 (23AAB) are inherently associated with Section 80CCC. It is according to the income incurred from a fund that has been set up by a reputed insurer, including the LIC.
The fund must have been established before August 1996 as a pension scheme. The contributions done by the taxpayer to the policy should be for earning pension income in the future.
The eligibility criteria for deductions are:
There are two important differences between Section 80C and Section 80CCC. They are:
The amount invested in the pension fund is obtained back by the taxpayer after a certain time as monthly pension. If the taxpayer surrenders the policy, the amount invested by him would also be given back with interest. When the policy is surrendered by the taxpayer or the nominee, the amount which has previously been claimed as a deduction under Section 80CCC would be taxable at the time of receipt according to the income tax slabs of the taxpayer for the year in which the amount is recieved. The same applies to the amount which is received as annuity.
Section 80CCC of the Income Tax Act was introduced to encourage taxpayers to deposit in pension funds and secure their future financially. It is not only accessible to Indian residents but also to non resident individuals contributing to pension funds. It is very useful and safeguards your future financially.
1. What deductions can be availed under 80CCC?
80CCC enables deduction for contributions made towards:
This includes interest or bonus accrued on the annuity Contributions made to Atal Pension Yojana are also eligible for deduction.
2. What is the difference between 80C and 80CCC?
Under Section 80C, the amount to be paid may come from income that is not chargeable to tax. However, under Section 80CCC, the funds should be paid out of the income that is chargeable to tax.
3. Does PF come under 80CCC?
Employees' contribution to the EPF qualifies for deduction under Section 80C. Employer's contribution is not subject to tax, however it is not eligible for deduction under Section 80C.
4. Does 80C apply to senior citizens?
Senior citizens can also utilize tax benefit under Section 80C on the deposit, but interest is taxable based on the eligible tax bracket. This scheme is given by the Indian Postal Service.
5. Is 80D included in 1.5 lakh?
Section 80C allows deductions up to Rs. 1.5 lakhs annually while Section 80D provides deductions up to Rs. 65000 subject to conditions.
6. Does 80CCD (1b) form a part of 80C?
80CCD (1b): is an additional deduction, and it is capped at Rs. 50,000 which is over and above section 80C.
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