Section 80CCC: Eligibility and Deductions for Pension Fund Investments

Section 80CCC is an important section of Chapter VI A that outlines the provisions for deductions on contributions made to specific pension funds. You can claim a deduction of up to ₹1.5 Lakhs on costs incurred when investing in a new pension plan or renewing the existing one that pays periodic annuity. The amount received as bonus or interest on the annuity is taxable during the receipt year.

Understanding these requirements will help you plan your finances and get the maximum deductions. Here is an overview of the eligibility criteria to qualify for tax deductions under Section 80CCC: 

• It is only applicable on renewal policy or if you get a new life insurance policy 

• The annuity plan or pension has to be issued by the Life Insurance Corporation of India (LIC) or any other policy from a recognised insurer

• The payment should be in accordance with the provisions of Section 10, Clause 23AAB

• If you receive any interest or bonus from the pension policy, it will be taxable

• The payout from the pension plan is considered as taxable income

• If you surrender the pension policy, the surrender value received is taxable

The section states that the maximum deduction you can claim is ₹1.5 Lakhs. However, this limit is to be read simultaneously with Sections 80C and 80CCD. This means that the total deduction limit under Sections 80CCC, 80CCD, and 80C is ₹1.5 Lakhs.

You can make a withdrawal from the policy or surrender it. However, as per the provisions of Section 80CCC of the Income Tax Act 1961, the amount will be taxable. The taxation depends on the income tax slab you fall under.

According to Section 80CCC of the Income Tax Act, the annuity proceeds are taxable. This is because annuity payments come under ‘Income From Other Sources’. The tax amount will be computed as per the applicable tax slab rate.