What is section 80CCC of the income tax?

Under section 80CCC you can claim an income tax deduction for investments done in certain specified pension funds. These funds include

  • The annuity plans of LIC (Life Insurance Corporation of India) and
  • Those specified under section10(23AAB) for the income tax act.

Who can claim 80CCC deduction?

For claiming the income tax benefit under section 80CCC you must

  • Be an individual As per the provisions of section 80CCC to claim a deduction one must be an individual. It means the non-resident individuals (NRI) can also benefit from this section.
  • Have a taxable income You can claim the tax benefit only when you have taxable income which can be adjusted against this deduction. If your income is below the basic exemption limit then there is no need for claiming the deduction.
  • Make a contribution to specified pension funds The tax benefit can be availed only if you invest the money in specified funds during the relevant financial year.
  • Make a contribution out of taxable income This is one of the most important points to be considered while claiming deduction under section 80CCC. The investment must be done out of your taxable income and should not be done from any other source.

How to claim tax benefit u/s 80CCC?

Once you have invested the funds u/s 80CCC you need to report the same at the time of filing your Income Tax Return to get the tax benefit. Tax benefit shall only be available on the amount invested and not on the interest or bonus accrued.

What are the terms and conditions of the 80CCC Section?

Here is a list of terms and conditions for the 80ccc section:

  • This 80CCC section is available to those individuals who have paid the sum for insurance renewal or purchase of a life insurance policy from their taxable income.
  • In the terms of the Section 10 ( 23AAB) the payment of funds from the policy should be made from the accumulated funds.
  • If any bonuses that are received or interest is accumulated, it is not eligible for deduction under Section 80CCC.
  • Any amount received from the policy as a monthly pension is liable for taxation as per the prevailing rates.
  • If the policy is surrendered, the amount would also be subject to taxation.
  • Any rebates that were available on investment in annuity plans before April 2006 are not allowed under Section 88.
  • Any amount that is deposited before April 2006 is not eligible for deduction.

What is the tax benefit allowed on investments u/s 80CCC?

The following are the tax implications and benefits u/s 80CCC

  • Investment Amount: You get a complete deduction upto Rs 1.5 lakh.
  • Pension or Withdrawal amount received: This amount is fully taxable in the hands of the receiver.
  • Interest or Bonus Received: The amount received shall also be fully taxable in the hands of the receiver.

Also, no tax benefit under section 80CCC will be allowed if you have already taken the benefit for this deduction under section 80C. The aggregate deduction under section 80C, 80CCC and 80CCD(1) cannot exceed Rs.1,50,000.

Frequently Asked Questions

Questions related to Section 80CCC of the Income Tax Act, 1961 are endless. Here we have curated a list of some of the most frequently asked questions about the same. Hopefully, these will help you curtail confusion to a great extent. Let’s have a quick look –

Q- Under Section 80CCC of the Income Tax Act, 1961, what is a pension fund?

It can be defined as an investment product that provides income after retirement. Under Section 80CCC of the Income Tax Act, 1961, a taxpayer is allowed to claim deductions in tax against the monetary contributions made towards specified pension funds.

Q- What if you are an NRI (Non-Resident Indian)? Are you still entitled to make this claim?

Yes, even if you are an NRI you are entitled to claim a tax deduction under Section 80CCC of the Income Tax Act, 1961.

Q- Can HUF take the tax benefit u/s 80CCC?

HUF (Hindu Undivided Family) are not allowed to claim the tax deductions under Section 80CCC of the Income Tax Act, 1961.

Q- Can you make a claim under both Section 80C as well as 80CCC of the Income Tax Act, 1961?

Yes. However, the aggregate limit under sections 80CCC, 80C, and 80CCD is Rs. 1.5 Lakhs.

Q- You are covered by an insurance plan that has nothing to do with pension plans. Can you still claim the tax benefit under Section 80CCC?

Well, the answer is no. You are not allowed to make any tax deduction claim if you have paid towards an insurance plan that’s nowhere related to any pension scheme under section 80CCC.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.



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