• Sanskar Garg

Sec 80CCA of Income Tax Act, 1961: Deduction in respect of deposits under National Savings Scheme

Updated: Oct 17

#incometax #incometaxlaws #deduction #section80C #specialcompanies #incometaxact1961 #taxation

 

Section 80CCA deals with provisions relating to deposits made in a deferred annuity plan or the National Savings Scheme. The assessee may deduct payments made under this part of Chapter VIA from their gross income.



Eligible Assessee : Individual and HUF


Maximum deduction : Total amount of deduction can be claimed under section 80CCA is restricted to the limit prescribed under section 80C which is Rs. 1,50,000


Eligible Deductions : These are as follows:-

  • Any amount in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;

  • Any amount to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may, by notification in the Official Gazette, specify.

However, no deduction under this subsection shall be allowed in relation to any amount deposited or paid under clauses (i) and (ii) on or after the 1st day of April, 1992.


Taxability :

  • Where any amount standing to the credit of the assessee as aforesaid in respect of which a deduction has been allowed together with the interest accrued on such amount is withdrawn in whole or in part in any previous year;

  • Any amount is received on account of the surrender of the policy or as annuity or bonus in accordance with the annuity plan of the Life Insurance Corporation in any previous year



The entire amount shall be assumed to constitute the assessee's income for the prior year in which such withdrawal is made or, as applicable, the amount is received, and shall, thus, be subject to taxation as such income for the prior year.


However, if the assessee chooses to surrender the policy before the first day of October 1992, the said annuity plan in respect of which he had paid any amount before the first day of April 1992, there is no taxability applicable to any amount received by the assessee on account of the surrender of the policy in accordance with the terms of the annuity plan of the Life Insurance Corporation.


When a Hindu undivided family splits up or when a group of people dissolves after a deduction has been granted, the amount is subject to taxation as if the individual receiving the income mentioned therein were the assessee.


12 views<