Section 80CCC – Deduction on Insurance Premiums for Pension

section 80CCC deduction of income tax act

Section 80CCC allows deduction of up to Rs. 1.5 Lakh in financial year with old tax regime, to be claimed against insurance premiums paid for a designated pension plan. So if you buy a policy that will provide you pension in future, such premiums paid every year by you can be claimed with Section 80CCC with old tax regime.

Note that new tax regime does not allow this deduction.

What is Section 80CCC

  • Section 80CCC of Income Tax Act allows us to claim deduction for insurance premiums paid, if the policy provides us the pension plan
  • The money spent on this life insurance policy must be spent either to buy a new policy or renew the existing ongoing policy. The premium amount paid can be claimed in a financial year
  • Section 80CCC has a limit of Rs. 1.5 Lakh in financial year and is part of Section 80C
  • So you cannot claim 80C and 80CCC amounts separately
  • Note that any bonus or income from this pension or annuity plan will not be considered as deduction in this section
  • Also, Section 80CCC is available only with Old Tax Regime. New Tax regime will not allow this deduction

ALSO READ: Old vs New Tax Regime Which is Better?

Conditions for Deductions with Section 80CCC

There are certain conditions to claim life insurance premium deduction with Section 80CCC as mentioned below:

  • You must pay the premium from your taxable income of the financial year to claim this deduction
  • Any bonus received from the plan will not be considered for deduction in this section
  • Any amount received as pension from annuity plan will be taxable for that financial year, and you need to pay income tax on such income
  • If policy is surrendered and you receive the amount, this amount will be taxable and you need to pay tax on such amount

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Eligibility for Section 80CCC Deduction

Let us now understand who is eligible to claim deduction with Section 80CCC:

  • Any individual tax payer who has bought annuity plan that is provided by approved insurance company can claim this deduction
  • Even NRI (Non Resident Indian) can claim Section 80CCC
  • Note that HUF (Hindu Undivided Family) cannot claim this deduction
  • Maximum of Rs. 1.5 Lakh of the premium amount paid in a financial year can be claimed with Section 80CCC

ALSO READ: Section 80CCD Deduction related to National Pension Scheme

Few Important points about Section 80CCC

Let us understand some more important points about Section 80CCC:

  • Deduction limits of Section 80C and Section 80CCC are clubbed together which helps you to claim maximum of Rs. 1.5 Lakh deduction in financial year with Old Tax Regime
  • Deductions are applicable only in the financial year when the premium amount is paid
  • Section 80CCC Deduction is available only when you buy insurance policy from approved insurance company for pension or annuity plan purpose. The insurer can be public or private entity
  • You can save income tax using Section 80CCC as it helps you to reduce the taxable income
  • You must have the transaction record to claim this deduction while filing Income tax return (ITR)

ALSO READ: Why Term Insurance is Better than Money Back Plans

Is 80C and 80CCC are same?

No, 80C and 80CCC are not same but the deduction limits are clubbed together with maximum limit of Rs. 1.5 Lakh.

80C provides deductions against Employee Provident Fund (EPF), Public Provident Fund (PPF), 5 year fixed deposits, Life insurance premiums, home loan principal amount deduction, etc.

Where as 80CCC is designed specifically to claim insurance premium paid to buy annuity or pension plan from approved insurer.

Both these sections can be clubbed to claim maximum of Rs. 1.5 lakh with old tax regime.

ALSO READ: All Deduction Allowed to Tax Payers

Frequently Asked Questions

What comes under 80CCC?

Section 80CCC specifically includes the insurance premiums paid against the pension plan bought by an individual, to save income tax with old tax regime. It has maximum deduction limit of Rs. 1.5 lakh in financial year.

Is PPF under 80C or 80CCC?

PPF or Public Provident Fund is under Section 80C and not under 80CCC.
80CCC allows deduction for insurance premiums bought for pension plan only.

Can I claim both 80C and 80CCC?

Yes, the options under 80C and 80CCC can be clubbed together to claim maximum of Rs. 1.5 Lakh in financial year with old tax regime to save income tax. Note that you cannot go above this limit, until the deduction limit is increased in upcoming years, after clubbing amounts from both these sections.

Is NPS under 80CCC?

No, NPS belongs to Section 80CCD. 80CCD1B allows you to voluntarily deposit in NPS scheme to claim additional Rs. 50,000 which is separate from the Section 80C limit.

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