Section 80CCC Of The Income Tax Act

Section 80CCC of the Income Tax Act is a widely used tax deduction benefit used by taxpayers contributing to life insurance pension funds.

This tax deduction is governed by specific terms and conditions. To qualify for the benefit, taxpayers must comply with these requirements.

Here is everything you need to know about Income Tax Section 80CCC.

What Is Section 80CCC Of The Income Tax Act?

Section 80CCC of the Income Tax Act allows for a deduction on the taxable income for the annual premium paid for life insurance pension plans.

Life insurance providers offer various savings and investment plans in addition to standard life insurance products. Among these are annuity or pension plans, which are designed to provide retirement benefits through regular income.

The annual contribution or premium paid towards these pension plans qualifies for the tax deduction under Section 80CCC of the Income Tax Act. This deduction applies to both the initial purchase and the renewal premiums needed to continue the existing policy.

The deduction limit applicable to Section 80CCC is part of the overall ₹1.5 lakhs limit shared by Section 80C, Section 80CCC and Section 80CCD(1). (Refer to the next sections for more detailed information.)

Difference Between Section 80C & 80CCC

Section 80C allows for a tax deduction for contributions made to eligible savings or investment plans and expenses incurred for specified purposes. For example, it applies to contributions made to Equity Linked Savings Scheme (ELSS), Public Provided Fund (PPF), Life Insurance, Sukanya Samriddhi Yojana, tuition fees paid for children, etc.

On the other hand, Section 80CCC is a subsection of Section 80C that allows tax deduction exclusively for the contributions or premiums paid for pension plans offered by life insurance providers.

Eligibility Criteria For Section 80CCC Of the Income Tax Act

• Only individual taxpayers, including both residents and Non-Resident Indians (NRIs), are eligible to claim tax deductions under Section 80CCC of the Income Tax Act.
• It is not applicable to any other category of taxpayers, including Hindu Undivided Families (HUFs).

Conditions Applicable to Section 80CCC Of The Income Tax Act

• The Section 80CCC tax benefit applies only to pension plans offered by life insurance companies. These pension plans provide a regular income to qualify for the benefit.
• The insurance provider can be either a public or private entity but must be approved by the IRDAI (Insurance Regulatory and Development Authority of India).
• Pension funds that qualify for income tax benefits under Section 80CCC must meet the eligibility conditions outlined in Section 10(23AAB).
• The income tax benefit under 80CCC applies only to the premium paid for the previous year.
• The Section 80CCC tax benefit applies only to taxpayers who opt for the old tax regime.
• Pensions received monthly or annually from an annuity plan, as well as any bonuses or interests accrued, do not qualify for tax deductions under Section 80CCC.
• If the life insurance pension plan is surrendered, the payout received will be subject to taxation.
• The rebates that were previously applicable to annuity plans purchased before April 2006 are not eligible for tax deductions under Section 80CCC.

What Is Section 10(23AAB)?

Section 10(23AAB) specifies the eligibility conditions for pension funds regarding the Section 80CCC income tax benefit.

The eligibility conditions are as follows:

• The pension funds should be set up by a life insurance provider as a pension scheme.
• The fund should have been set up as a pension scheme after August 1996.
• The IRDAI should approve the life insurance provider.
• Individuals need to contribute to these funds to receive a pension.

How Much Can I Claim Under Section 80CCC Of The Income Tax Act?

The maximum Section 80CCC limit for tax deduction is ₹1.5 lakhs per annum. However, it includes Section 80C, Section 80CCC and Section 80CCD(1).

Here is a brief detail about the maximum deduction limit applicable to these Sections.

Sample Illustration

Mr Vignesh works in a private software company in Bangalore. His salary, including basic and dearness allowance, is ₹8 lakhs.

His eligible tax deductions under Section 80C and Section 80CCD(1) are ₹90,000 and ₹40,000. He also pays ₹35,000 as the annual premium for a life insurance annuity plan.

Here is how much he can claim under Section 80CCC of the Income Tax Act.

Therefore, only ₹20,000 out of the ₹35,000 contributed towards the life insurance annuity plan qualifies for the Section 80CCC tax benefit.

When Can I Claim The Deduction Under Income Tax Section 80CCC?

The tax deduction under Section 80CCC can be claimed while filing your Income Tax Returns (ITR), provided you fulfil the necessary conditions.

What Is The Difference Between Section 80CCC and Section 80CCD?

Section 80CCC allows tax deductions exclusively for contributions made towards pension plans offered by life insurance providers.

On the other hand, Section 80CCD provides tax deductions for contributions made to the National Pension Scheme (NPS) and Atal Pension Yojana (APY). It includes tax deduction benefits for both employees’ and employers’ contributions to the NPS.

Key Pointers To Remember For Section 80CCC Of The Income Tax Act

• Ensure to comply with all the conditions applicable to claim benefits under Section 80CCC of the Income Tax Act discussed above.
• Keep a record of all transactions related to premium payments for the life insurance pension plan.
• The premium for the pension plan should have been paid from your taxable income for the tax deduction under Section 80CCC of the Income Tax Act.
• The regular income you receive from the pension plan should be a part of your taxable income.
• The deduction under Section 80CCC of the Income Tax Act cannot exceed your taxable income.
• Contributions made towards the National Pension Scheme or Atal Pension Yojana do not qualify for the income tax benefit under Section 80CCC.

Integrating Section 80C and Section 80D For Comprehensive Tax Benefits

While benefiting from Section 80CCC for the Income Tax Act for contributions to life insurance annuity plans, you may also explore additional tax benefits available under Section 80C and Section 80D.

We have discussed Section 80C, which provides tax benefits for contributions towards specific savings or investment plans and certain specified purposes.

Section 80D allows for a tax deduction benefit on the annual premium paid for a health insurance policy up to ₹1 lakh. This can be for health insurance plans purchased for self, family, and parents.

Also Read: Health Insurance Tax Deductions

Explore Reliance General Insurance health insurance policies online to secure comprehensive coverage for you and your family while taking advantage of the tax benefits under Section 80D.

Frequently Asked Questions About Section 80CCC Of The Income Tax Act

1. Can Non-Resident Indians (NRIs) claim tax deductions under Section 80CCC?

   Yes, NRIs can claim the Section 80CCC tax benefit, provided they fulfil the necessary conditions as discussed above.

2. Can I claim income tax deductions under Section 80C as well as Section 80CCC of the Income Tax Act?

   Yes, you can claim deductions for eligible payments and expenses under both Section 80C and Section 80CCC, provided you do not exceed the overall deduction limit of ₹1.5 lakhs.

3. Can I claim the 80CCC tax benefit if I opt for the new tax regime?

   No, the tax deduction under Section 80CCC applies only to taxpayers who opt for the old tax regime.

4. Which plan comes under Section 80CCC?

   The Section 80CCC tax benefit applies to pension plans offered by life insurance providers.

5. Can I claim tax deductions up to ₹1.5 lakhs each under Section 80C and Section 80CCC?

   No, the overall combined deduction limit for Section 80C, Section 80CCC and Section 80CCD(1) is ₹1.5 lakhs. Therefore, you cannot claim separate tax deductions up to ₹1.5 lakhs each under Section 80C and Section 80CCC.

6. What is the difference between Section 80C, Section 80CCC, and Section 80CCD?

   Section 80C refers to tax deductions applicable to contributions made towards eligible savings or investment plans and the expenses incurred towards specified purposes.

   Section 80CCC allows a tax deduction on the premium paid towards life insurance pension plans. Section 80CCD refers to tax deductions applicable to the National Pension Scheme (NPS) and Atal Pension Joyana (APY).

7. Can I claim tax deductions under Section 80CCC for premiums paid for multiple years upfront?

   The deduction under Section 80CCC of the Income Tax Act is applicable for the premium paid for the previous year. The premiums paid for other years should be claimed in the respective years.

8. Does the tax deduction for contributions made towards PPF (Public Provident Fund) come under Section 80C or Section 80CCC?

   The contribution made towards PPF qualifies for a tax deduction under Section 80C of the Income Tax Act.

Disclaimers:

*T&C Apply. For more details on risk factors, terms conditions, brochure, and exclusions, please read the policy wording and CIS carefully before concluding a sale.

Tax benefits: Tax benefits are subject to conditions under Section 80D of the Act and amendments thereof. The tax laws are subject to amendments/changes from time to time. Please consult your tax advisor for details.​