Under Section 80CCC, an individual can claim for deduction for any amount paid or deposited in any of the annuity plan of the Life Insurance Corporation of India for himself/herself or for any other insurer. The maximum amount of money available for tax deduction under this section is Rs 1,50,000 per annum and it involves expenses incurred in buying a new policy or for continuing an existing plan which pays pension or a periodical annuity as referred to in Section 10(23AAB). The deduction limit under the Section 80CCC is clubbed along with the limit of Section 80C and Section 80CCD. The pension amount which an individual receives (including interest amount or accumulated bonus) will be taxable during the year of receipt.
A Hindu Undivided Family cannot claim income tax benefits under Section 80CCC.
Terms of Section 80CCC
- The maximum amount of deduction that can be claimed under this section during a financial year stands at Rs 1,50,000.
- The tax deduction can be claimed only by the taxpayer who has actually deposited some amount or has contributed towards buying or purchasing an annuity plan from either Life Insurance Corporation of India (LIC) or any other insurance company in India.
- The policy towards which payments are made has to pay out pension from the accumulated funds, as per the terms laid out in Section 10 (23AAB).
- The annuity plan’s surrender value either partly or fully will be treated as income and tax will be levied accordingly.
- Under this section, a taxpayer cannot claim for deduction on interests or bonuses accrued from the policy.
- Tax deductions can only be claimed on amounts actually paid for the preceding year. If an individual pays one-time premium amount then tax rebate for the same can be claimed during the year during which such payments have been made.