loader2
Partner With Us

All You Need To Know About Section 80CCC

Most people in the private sector don’t get pensions, so they have to do their own retirement planning. If you’re one of those unwilling to work out the investments required to ensure an adequate income post-retirement, your option would be to get into a pension fund. The icing on the cake is that you get tax benefits by investing in such funds.

Most of the Pension plans have two phases: Accumulation phase and Income phase. In the Accumulation Phase, you will pay the premium at regular intervals to the plan provider. When the Income Phase begins, you will be able to withdraw 1/3rd of the money saved, while the remaining amount will be used to purchase an annuity product, which will create a source of regular income for the rest of your life.

Section 80CCC of the Income Tax Act 1961 allows you to claim tax deductions against investments in pension funds, including the cost of a new policy, or renewal of an existing pension policy, up to a maximum of Rs. 1.5 lakh per annum. To qualify for this deduction, the policy must be a pension or annuity based one. The pension amount received from such policy is taxable.

 

Features of Section 80CCC deduction

  • Contributions towards the policy must have been made with the intention to earn a pension post retirement.
  • The pension must be from a particular fund, under Section 10 (23AAB). This includes annuity plans of the Life Insurance Corporation of India, or any other pension scheme recognised and approved by the Insurance Regulatory Development Authority of India (IRDA)
  • It is important to note that you can claim deductions only for the year you paid for the pension. In other words, if you have made a one-time payment, you can claim tax deductions only for that particular year, and not for the tenure of the plan. However, if you are paying premiums on a regular basis, such as annual payments, you can claim tax deductions every year.
  • The pension you get is considered taxable income and subject to income tax.
  • If you surrender the policy, the surrender value is taxable at source.
  • A Hindu Undivided Family (HUF) is not eligible for exemption under Section 80CCC.
  • The deduction limits available under Section 80CCC along with Section 80C and Section 80CCD (1) cannot exceed Rs. 2 lakh (Rs. 1.5 lakh under 80C, and another Rs. 50,000 under Section 80CCD(1b), which is for investments in either the National Pension Scheme or the Atal Pension Yojana).

 

 The provisions of Section 80CCC thus allow you claim a significant tax rebate if you invest in a pension or annuity plan, which are by nature long term and have strict lock-in periods.

Click here to open a trading account with ICICIdirect and invest in NPS or a variety of other instruments.

 

Disclaimer: The contents herein mentioned are solely for informational purpose and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

Most Popular

f
  • 27 Sep 2021
  • ICICI Securities

The Five Rules of Investing in Equities

Investment in equity should be made by following certain rules. There are five rules of equity investments. They arise from an understanding of the stock market and mitigate the chances of making mistakes and incurring losses.

  • 27 Sep 2021
  • ICICI Securities

Investment Rules: 5 Thumb Rules of Investing in Market

While you work for money, suitable investments make your money work for you. How you take control of your finances determines the growth of your wealth and additional income streams. Click here to read about the five golden rules you can follow while investing.

  • 15 Sep 2021
  • ICICI Securities

5 Most Popular Reasons for Switching Bank

In the beginning, you would hear from them quite often. But of late, you're noticing more and more signs that it's no longer working. We are referring to your relationship with your bank. Click here to read how to recognize the red flags in your banking relationship and why it might be a good time to end the bond.

  • 15 Sep 2021
  • ICICI Securities

How Intraday Trading Works? Detailed Ideas

Intraday trading in India has been gaining momentum of late. It is no longer the option of only trade pundits.

  • 15 Sep 2021
  • ICICI Securities

What is Intraday trading? A Beginner's Guide

With the advancement of technology and increased knowledge about the stock market, trading is no more a domain dominated by stock pundits.

  • 05 Sep 2021
  • ICICI Securities

Is it Good To Invest in Cyclical Stocks?

Akin to how the pedals of a cycle go up and down as it moves forward, the share price of certain stocks goes up and down in accordance with the economic cycles a country goes through. 

  • 05 Sep 2021
  • ICICI Securities

A primer on Fixed Maturity Plans

If you happen to have some surplus funds which you don’t need for a specific period, but you don’t want to take the risk of investing this money in the stock market, you can very well put this money in a Fixed Maturity Plan or FMP. 

  • 05 Sep 2021
  • ICICI Securities

How to Choose the Best Equity Mutual Fund

You must have heard a lot about investing in mutual funds. But before jumping on this trend you need to assess a mutual fund scheme according to your goals, investment horizon, risk profile, liquidity needs and many other factors to find a suitable match. 

  • 05 Sep 2021
  • ICICI Securities

A Beginner’s Guide to Monetary Policy Tools

The Reserve Bank of India has the incredibly crucial responsibility to formulate the monetary policy. The main objective of monetary policy is to control inflation and provide a conducive environment for the country's economic growth. 

  • 05 Sep 2021
  • ICICI Securities

Buying Penny Stocks and its Risks

There is a specific category of stocks whose prices are very low and they seem to yield exponential returns. But do you know that investment in such stocks could be risky? 

Open an Account

Sign Up for Free

+91

Please use the mobile no registered with Aadhaar.

OTP sent to +91 1234567890

Didn’t received OTP? Resend

00:30

iciciDirect-money-logo
iciciDirectMoney-App

Get Research Backed Recommendations.

Download The app now

or Scan below QR Code To download app

QRcode