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Section 80CCC of the Income Tax Act of 1961 provides deductions of up to Rs. 1.5 lakhs per annum for contributions made by an individual towards specified pension funds that are offered by a life insurance. The deduction is within the limit of section 80C.
The Section 80CCC exemption limit includes the money spent on the purchase of a new policy or payments made towards renewal or continuation of an existing policy.
The primary condition for availing this exemption is that the policy for which the money has been spent must be providing a pension or a periodical annuity.
Section 80CCC is read along with Section 80C and Section 80CCD(1), thereby limiting the total exemption limit to Rs. 1,50,000/- per annum.
Following are the terms and conditions applicable under the Act: –
The provisions of Section 10 (23AAB) are inherently linked with Section 80CCC. It relates to the income earned from a fund that has been set up by a recognized insurer, including the LIC.
The fund must have been set up before August 1996 as a pension scheme. The contributions made by the taxpayer to the policy must have been with the intention of earning pension income in the future.
The conditions regarding eligibility for deductions are:
Here are some essential points that you must know regarding the applicability of 80CCC Section:
With the provisions of Section 80CCC, you can save a significant sum of money towards your taxation liability.
To be eligible to avail this exemption, you must keep a record of the transaction for the payment of money towards the insurance policy.
Under no circumstances can the exemption limit exceed the income of the individual. Along with Section 80CCC, there are several other provisions also under the Income Tax Act to help you save your taxation liability.