Section 80CCC

Section 80CCC of the Income Tax Act of 1961 is part of the larger 80C category, which offers a cumulative tax deduction of up to Rs. 1.5 lakh per year for investments in PPF, EPF/VPF, life insurance, recognized pension funds, and other similar vehicles. Section 80CCC particularly authorizes investors to seek tax deductions in lieu of pension fund contributions.

It should be emphasized, however, that only particular pension plans designated under Section 10 (23AAB) are qualified for the tax deduction provided by Section 80CCC. Individuals who contribute to an annuity plan of Life Insurance Corporation or any other pension fund offered by authorized insurance companies in India are eligible for tax deductions under current laws. 

Pension funds and retirement programs offered by mutual fund companies do not provide tax benefits under section 80CCC, although the National Pension System does under Section 80CCD of the IT Act.

Characteristics of Section 80CCD from the Income Tax Act of India

  • Taxpayers who have deposited a portion of their taxable income to purchase or renew an annuity plan from LIC or another insurer are eligible.
  • According to Section 10, the policy should pay the pension from the accrued funds (23AAB).
  • Interest or bonuses earned as a result of the policy are not tax deductible.
  • In a fiscal year, the maximum permitted deduction is Rs.1 lakh. This maximum is set to be increased to Rs.1.5 lakhs beginning with the fiscal year 2016-17, i.e., on April 1, 2016.
  • The surrender value of the annuity plan will be regarded as income and taxed appropriately.
  • Section 88 prohibits rebates on investments in annuity programs made prior to April 1, 2006.
  • Section 80C deductions are likewise not applicable to sums deposited before April 1, 2006.
  • The proceeds from the policy as pension funds are taxed since they are considered income from the prior year. This includes any accrued interest and incentives.

Who is Eligible for Section 80CCD?

  • Section 80CCC allows any individual, resident or non-resident, to seek a tax deduction (subject to making an investment in notified pension funds).
  • The Hindu Undivided Family (HUF) cannot obtain the Section 80CCC tax benefit.
  • The amount claimed for deduction is presumed to have been paid from the pension fund subscriber's net taxable income.
  • The amount claimed for deduction under Section 80CCC should not exceed the subscriber's net taxable income.

Claim Limit of Section 80CCD

  • Section 80CCC lets you claim a deduction of Rs 1.5 lakh.
  • Section 80CCC deduction limit is combined with sections 80C and 80CCD. That is, by combining all three portions, you can get the maximum deduction.
  • Rs. 1.5 lakh = 80C+80CCC+80CCD (1).

What is the Distinction Between Section 80C and 80CCD?

  • The fundamental distinction between Section 80C and Section 80CCC of the Income Tax Act of 1961 is that the sum to be paid under Section 80C may originate from income that is not taxable. While under Section 80CCC, the monies must be paid out of the taxable income.

  • Individuals who have overpaid taxes but have invested in policies from LIC, PPF, Mediclaim, or other insurance companies may claim these deductions under the Section and receive a refund of overpaid taxes when filing Income Tax Returns.

  • The deductions permitted under Section 80CCC are available to both Indian residents and non-residents. A Hindu Undivided Family, on the other hand, is not entitled to deductions under this Section.

  • After exhausting the maximum of INR 1.5 lakhs under Sections 80C, 80CCC, and 80CCD, a person cannot claim any more deductions (1).

The Tax Process to Get Back the Invested Funds

The sum invested in the pension fund is returned to the taxpayer as a monthly pension after a predetermined period of time. If the taxpayer surrenders the policy, the amount invested will be returned to him with interest.

When the taxpayer or nominee surrenders the policy, the amount previously claimed as a deduction under Section 80CCC becomes taxable at the time of receipt according to the taxpayer's income tax slabs for the year in which the amount is received. The same is true for the amount received as an annuity.

Relationship Between Section 10 (23AAB) and Section 80CCD

The pension plan must pay the money in the manner required in Section 10 (23AAB) in order to claim any deductions under Section 80CCC. It is critical to comprehend this provision and how it relates to Section 80CCC.

Section 10 is a subsection of Section 10. Section 10 enables exemption on income earned from a fund formed by a registered insurance business, including LIC.

Assume the fund was founded as a pension system prior to August 1996, and you contribute to it with the intention of receiving annuities. In that instance, the fund's revenue will be excluded.

Only funds approved by the Controller of Insurance and Development Authority of India (IRDAI) are established under Section 3(1) of the Insurance Regulatory Act.

Section 10 (23AAB) allows you to claim an exemption on the revenue of funds. You are permitted to deduct contributions to such funds under Section 80CCC. When the funds accrue, they are paid to you in the form of a pension, along with any interest earned. The pension is subject to taxation.

Save up to Rs.46,800 on taxes
Check out the top tax-saving funds with the highest returns in the past 3 years
EXPLORE NOW
Loading...
ⓒ 2016-2024 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 4.9.8
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  GROWWMF |  SBI |  AXIS |  HDFC |  UTI |  NIPPON INDIA |  ICICI PRUDENTIAL |  TATA |  KOTAK |  DSP |  CANARA ROBECO |  SUNDARAM |  MIRAE ASSET |  IDFC |  FRANKLIN TEMPLETON |  PPFAS |  MOTILAL OSWAL |  INVESCO |  EDELWEISS |  ADITYA BIRLA SUN LIFE |  LIC |  HSBC |  NAVI |  QUANTUM |  UNION |  ITI |  MAHINDRA MANULIFE |  360 ONE |  BOI |  TAURUS |  JM FINANCIAL |  PGIM |  SHRIRAM |  BARODA BNP PARIBAS |  QUANT |  WHITEOAK CAPITAL |  TRUST |  SAMCO |  NJ