Sec 80CCC of Income Tax Act, 1961: Deduction in respect of contribution to certain pension funds.
Individuals may claim tax deductions for payments made to specific pension plans under Section 80CCC of the Income Tax Act of 1961. This provision allows for a tax deduction of up to Rs. 1,50,000 per year on expenses related to purchasing a new policy or maintaining an existing one that pays a pension or periodic annuity (as defined in Section 10(23AAB)). The pension amount received, along with any interest or bonuses that have accrued on the annuity, is, nevertheless, taxable in the year of receipt. The deduction limit under Section 80CCC is combined with the limits of Sections 80C and Section 80CCD, making the total tax deduction limit that may be claimed Rs. 1,50,000. This is an important factor to keep in mind.
Here are some essential points that you must know regarding the applicability of 80CCC Section:
The deduction limits available under Section 80CCC are clubbed together with Section 80C and Section 80CCD (1) to determine the total deduction limit available.
The provisions of Section 80CCC are specifically applicable to those insurance providers in India that offer annuity or pension plans. The insurer could be a public Sector entity or a private Section or entity as well.
The deductions are applicable for the premium/sum paid for the preceding Assessment Year only. For instance, if an individual pays the sum for 2-3 years together, then deduction can only be claimed for the amount that pertains to the preceding year only.
The maximum available deduction under this Section is Rs. 1,50,000/- per annum.
With the provisions of Section 80CCC, you can save a significant sum of money towards your taxation liability. To be eligible to avail this exemption, you must keep a record of the transaction for the payment of money towards the insurance policy. Under no circumstances can the exemption limit exceed the income of the individual. Along with Section 80CCC, there are several other provisions also under the Income Tax Act to help you save your taxation liability.