Deduction in Respect of Contribution to Pension Fund Section 80CCC

As per section 80CCC of the Income tax Act, 1961 Individual can claim income tax deduction for amount deposited in any annuity plan of the LIC of India or any other insurer for receiving pension from a fund referred to in section 10(23AAB) but maximum deduction under section 80C, 80CCC and 80CCD can’t exceed Rs 1 Lakhs. Read Income Tax 80C Deduction for life insurance, provident fund, ULIP, Mutual Fund,tuition fees, Housing Installment, Term Deposit, NSC

CONDITIONS:

The conditions for deduction are as follows:

  • The assessee should be an Individual
  • Any amount deposited and paid by assessee in any annuity plan of the LIC of India or any other insurer for receiving pension from a fund referred to in section 10(23AAB)
  • The deduction shall be restricted to Rs.100000

AMOUNT OF DEDUCTION: Investment in Top ELSS (Tax Saving/Equity Linked Saving Scheme) Mutual Funds

If the aforesaid conditions are satisfied, then the amount, deposited or

Rs.100000, whichever is lower, is deductable.

Notes :

The other points should be kept in mind:

  • After claiming deduction, the assessee and his nominee should surrender the annuity, before the maturity date of such annuity
  • The surrender value shall be taxable in the hands of assessee or his nominee as the case may be in the year of receipt
  • Pension will be taxable in the hands of assessee or his nominee as the case may be in the year of receipt
  • The maximum amount deductable under sec. 80CCC is Rs.100000
  • The aggregate amount of deduction u/s 80C, 80CCC, 80CCD cannot exceeds Rs.100000

Income Tax Deduction under section 80CCA for investment in National Savings Scheme or payment to a deferred annuity plan

Deduction in respect of contribution to certain pension funds.

80CCC. (1) Where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer] for receiving pension from the fund referred to in clause (23AAB) ofsection 10, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee’s account, if any) as does not exceed the amount of ten thousand rupees in the previous year.

(2) Where any amount standing to the credit of the assessee in a fund, referred to in sub-section (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessee’s account, if any, is received by the assessee or his nominee—

             (a)   on account of the surrender of the annuity plan whether in whole or in part, in any previous year, or

             (b)   as pension received from the annuity plan,

an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year.

(3) Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section, a rebate with reference to such amount shall not be allowed under section 88.

The following sub-section (3) shall be substituted for the existing sub-section (3) of section 80CCC by the Finance Act, 2005, w.e.f. 1-4-2006 :

(3) Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section,—

              (a)   a rebate with reference to such amount shall not be allowed under section 88 for any assessment year ending before the 1st day of April, 2006;

              (b)   a deduction with reference to such amount shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.

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