Section 80CCC of the income tax act provides the taxpayer a rebate up to rs.1.5 lacs per annum for the amount of share (contribution) they paid to the respective pension funds which are offered by a life insurance company. The deduction is limited with the capacity under section 80C of Income-tax.
Section 80 CCC
Section 80 CCC is an exemption limit that includes the money that is spent on the purchase of the new policy or the payments made for the renewal of the life insurance policy for which the money has been spent for providing a pension or periodical annuity.
The total exemption limit is RS 1,50,000.
Terms And Conditions Of Section 80CCC
- The tax rebate is available to those individuals who have paid the sum for the renewal or purchase of a life insurance policy from their taxable income.
- If any bonuses are received or interest accrued it is not liable to deduct under section 80CCC.
- But, if any amount is provided as a monthly pension from the policy to the policy bearer, it is liable to be taxed.
- If the policy is surrendered, the amount would also be liable to be taxed.
- Any amount which is deposited before April 2006 is not eligible for deduction.
- Furthermore, the payments of funds from the policy should be made as per the terms and conditions of section 10 (23AAB) from the matured policy funds.
Eligibility For Deduction Under 80CCC
- The deduction is available to an individual taxpayer who has subscribed to an annual plan which has offered by an approved insurance company.
- HUF: Hindu undivided family is not eligible for exemption under section 80CCC.
- The provisions are valid to both residents as well as non-residents.
- The insurance bearer could be a public sector employee or a private sector employee.
Important Points To Remember
- The deduction limits under section 80CCC are combined with section 80C and 80CCD(1) which is the total deduction limit available for an individual.
- The provisions of section 80CCC are specifically applied to those insurance-providing companies that offer annual or pension plans.
- The deductions are only applicable for the premium or sum of the amount paid for the previous year.
- The maximum deduction under this section is Rs 1,50,000 per annum.
Section (10) 23AAB?
Clause 23AAB is applied to the funds from the insurance. I registered as a pension scheme, any income earned by the maturity amount of policy can be claimed as a deduction under Section 10, clause 23AAB. When the fund is accumulated and paid to the plan’s insurance holder in the form of a pension, this pension is taxable in the insurance holder’s hands and not at the pension level.
Section 80CCC,80C , 80CCD –comparison– Insurance , Pension Contribution
|Eligibility for tax deductions|
|80 C||For the acquisition of property, Sukanya smriddhi Yojana (SSY), National saving declaration (NSC), Senior resident reserve funds plot (SCSS), ULIP, charge saving FD for a very long time, Infrastructure securities, and so forth|
|80CCC Deduction for life insurance annuity plan.||80CCC Deduction for life coverage annuity plan. 80CCC permits derivation for installment towards annuity benefits plans Pension got from the annuity or sum endless supply of the annuity, including revenue or reward gathered on the annuity, is available at the time of receipt.|
|80CCD (1) Deduction for NPS||Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following
|80CCD (1b) Deduction for NPS||Additional deduction of Rs 50,000 is allowed for the amount which is deposited to NPS account
fundings to Atal Pension Yojana (government pension scheme) is also eligible for deduction.
|80CCD (2) Deduction for NPS||Employers’ contribution is allowed for the deduction of about 10% of basic salary plus dearness allowance under this section. The benefit of this section is given only to salaried individuals and not self-employed.|