The government provides tax benefits to individuals for investing in pension or annuity plans by the Life Insurance Corporation and other insurers approved by the Insurance Regulatory and Development Authority (IRDA). This is done to help individuals save money (lump sum or annuity) for their retirement. An individual can claim the deduction of Rs. 1.5 lakh for investment in pension and annuity plans. However, the deduction limit of Rs. 1.5 lakh is applicable along with the combined limit of section 80 C, section 80CCC section 80CCD(1).
Section 80CCC allows individuals to claim a deduction up to a specific limit on the sum invested in purchasing or paying a premium on a pension plan offered by the Life Insurance Corporation (LIC) or other insurers approved by the Insurance Regulatory and Development Authority (IRDA). Specific Pension funds approved under section 10(23AAB) are eligible for deduction under section 80CCC.
The taxpayer can claim a deduction on investment under sections 80C, 80CCC, and 80 CCD(1) up to Rs. 1.5 lakh in a financial year.
There is a relation between Section 10(23AAB) and Section 80CCC. The pension schemes that meet the following criteria are eligible for deduction under section 80CCC:
Following are the terms and conditions to obtain deduction under Section 80CCC:
Here are some essential points that you must know regarding the applicability of the Section 80CCC:
Under section 80CCE, the aggregate deduction under section 80C, section 80CCC, section 80CCD(1) is covered and allowed up to the limit of Rs. 1.5 lakh. However, under section 80CCD(1b), an individual can avail of additional Rs 50,000 for contribution towards the National Pension Scheme as notified by the government.
With the provisions of Section 80CCC, you can save a significant sum of money towards your taxation liability.
To be eligible to avail this deduction, you must keep a record of the transaction for the payment of money towards the insurance policy. Under no circumstances the deduction amount can 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.
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