80CCC of Income Tax act: Terms, Deduction limit, and Eligibility

People can claim income tax (IT) deductions of up to Rs 1.5 lakh per year for payments made to specific pension plans as per Section 80CCC of Income Tax Act, 1961. Section 80CCC was created to encourage taxpayers to contribute to pension plans and ensure their financial future. It is available to Indian residents who contribute to pension funds as well as non-resident Indians. It is incredibly practical and protects your financial future.

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See also: Section 80CCD of Income Tax Act

Section 80CCC of the Income Tax Act: What is it?

Payments that you make towards buying new insurance or the renewal or continuation of an existing policy are included in the Section 80CCC deduction limit. The policy for which you make the payment must be for a pension plan or a periodic annuity to qualify for this exemption.

All About: Section 44ADA

Section 80CCC of the Income Tax Act: Eligibility

Here are some of the requirements that must be met to qualify for a deduction under Section 80CCC of the Income Tax Act.

The deduction benefit is exclusively available to individual taxpayers. The deductions are not available to groups, corporations, sole proprietorships, partnerships, or Hindu Undivided Families (HUFs) that do not appear to be individual taxpayers.
Your investment should only be made in a pension plan that pays annuities upon maturity.
You can also claim the deduction benefit if you are an individual tax-paying NRI.
The amount claimed as a deduction cannot be more than the individual taxpayer’s net taxable income.
You can only claim the deduction benefit for the money you paid in that particular financial year.
To qualify for a tax deduction under Section 80CCC, the pension plan acquired from the insurance firm should be approved by the Insurance Regulatory and Development Authority of India (IRDAI).
If you discontinue the annuity plan entirely or partially, you cannot claim a tax deduction.
If you get a pension from one of these plans, you cannot claim a tax deduction.

To know more about the terms and conditions, make sure to check thoroughly with your pension plan provider.

Section 80CCC of the Income Tax Act: Deduction limit

Section 80CCC of the Income Tax Act permits an annual deduction benefit of up to Rs 1.5 lakh.
The deduction limit is also based on 80C and Section 80CCD (1) jointly.
The combined investment for these three sections — 80C, 80CCD(1), and 80CCC — must not exceed Rs 1.5 lakh.

Deduction for NPS allowed under overall limit of Rs 1.5 lakh with extra Rs 50,000 under Section 80CCD

Section 80CCD (1B) provides for an exclusive deduction of Rs 50,000 not covered under Section 80CCE. This means that those who have exhausted Rs 1.50-lakh deduction limit with or without NPS contribution can claim an additional deduction of up to Rs 50,000 every year for contribution made for NPS under Section 80CCD (1B).

What is Section 80C?

Unlike Section 80CCC, up to Rs 1.5 lakh can be deducted annually from your taxable income under Section 80C on a variety of investments.

What is Section 80CCD?

Investments made in the National Pension System (NPS) and the Atal Pension Yojana (APY) are tax-deductible under Section 80CCD of the Income Tax Act of 1961.

Section 80CCD(1) and Section 80CCD (2) are the two subsections under Section 80CCD deductions. This classification helps to distinguish between payments made to a pension fund individually and those made by employers. A person may currently deduct up to Rs 1.5 lakh under Section 80CCD(1).

Section 80CCC of the Income Tax Act: Eligible investments

Section 80CCC

Annuity pension plans
The pension you receive from annuity plans
The amount you receive upon the annuity surrender, which includes both interests and bonuses

Section 80C

PPF
Sukanya Smriddhi Yojana (SSY)
Senior citizen savings scheme (SCSS)
EPF
Saving schemes linked to equity
FD for 5 years
National saving certificate (NSC), and more

Section 80CCD(1)

The highest deduction is limited to the lowest of the following amounts:

10% gross pay if the individual is an employee
20% of the gross income if the individual is self-employed
The limit is Rs 1.5 lakh

Section 80CCC of the Income Tax Act: How can you receive the invested amount?

After a given period of time, the taxpayer receives a monthly pension equal to the amount they have invested in the pension fund. If you surrender the coverage, the investment amount plus interest would likewise be returned. The amount claimed as a deduction would be taxable when the taxpayer or the nominee surrenders the policy.

FAQs

What is the difference between Section 80C and Section 80CCC?

The amount to be paid may come from income that is not subject to tax under Section 80C. However, as required by Section 80CCC, the amounts must be paid from taxable income.

What deductions can you avail of under Section 80CCC?

You can avail deductions on annuity pension plans, pension amount received from the annuity plans, or amount received during annuity surrender.

What are the eligible investments under Section 80C?

Eligible investments under Section 80C include, but are not limited to, PPF, Sukanya Smriddhi Yojana (SSY), Senior citizen savings scheme (SCSS), EPF and Saving schemes linked to equity.

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Priya Banerjee

Priya Banerjee, a writer with a keen eye on the property market, she deciphers the ever-changing trends in residential real estate. Priya excels at simplifying complex real estate terms, making them easy for everyone to understand. Her well-researched advice helps buyers and investors understand complex topics.