Deduction in respect of contribution to certain pension funds.
80CCC.
(1) Where an assessee being an individual has in the previous year paid
or deposited any amount out of his income chargeable to tax to effect
or keep in force a contract for any annuity plan of Life Insurance
Corporation of India 70[or any other insurer] for receiving pension from the fund referred to in clause (23AAB) of section 10,
he shall, in accordance with, and subject to, the provisions of this
section, be allowed a deduction in the computation of his total income,
of the whole of the amount paid or deposited (excluding interest or
bonus accrued or credited to the assessee’s account, if any) as does not
exceed the amount of ten thousand rupees in the previous year.
(2)
Where any amount standing to the credit of the assessee in a fund,
referred to in sub-section (1) in respect of which a deduction has been
allowed under sub-section (1), together with the interest or bonus
accrued or credited to the assessee’s account, if any, is received by
the assessee or his nominee—
(a) on account of the surrender of the annuity plan whether in whole or in part, in any previous year, or
(b) as pension received from the annuity plan,
an amount equal to the whole of the amount referred to in clause (a) or clause (b)
shall be deemed to be the income of the assessee or his nominee, as the
case may be, in that previous year in which such withdrawal is made or,
as the case may be, pension is received, and shall accordingly be
chargeable to tax as income of that previous year.
(3)
Where any amount paid or deposited by the assessee has been taken into
account for the purposes of this section, a rebate with reference to
such amount shall not be allowed under section 88.]
The following sub-section (3) shall be substituted for the existing sub-section (3) of section 80CCC by the Finance Act, 2005, w.e.f. 1-4-2006 :
(3) Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section,—
(a) a
rebate with reference to such amount shall not be allowed under section
88 for any assessment year ending before the 1st day of April, 2006;
(b) a
deduction with reference to such amount shall not be allowed under
section 80C for any assessment year beginning on or after the 1st day of
April, 2006.A short note on section 80CCC of Income Tax Act 1961
Section 80CCC of Income Tax Act 1961 deals with the deductions and
income in respect of contributions to certain Pension funds by an
individual assessee. Here below the relevant provisions of section 80CCC
are discussed.
To whom the deduction is available u/s 80CCC:
The deduction u/s 80CCC is available to an individual assessee only as
the wording of section 80CCC(1) starts as “Where an assessee being an
individual…..”. Thus its only the individual who is eligible for
deduction u/s 80CCC. The deduction under this section is also available
to a non resident individual.
The amount must have been paid out of income chargeable to tax:
Another condition for claiming deduction u/s 80CCC is that the amount
of contribution paid in respect of which deduction has to be claimed,
must have been paid out of the income chargeable to tax of the
concerned individual assessee.
Deduction is available in respect of contributions made towards annuity plan for receiving pension:
The deduction u/s 80CCC is available only in respect of contributions
made to effect or keep in force a contract for any annuity plan of Life
insurance Corporation of India or any other insurer for receiving
pension from the fund referred to in clause 23AAB of section 10.
Thus in simple words contributions made towards pension plans of LIC or other insurers are eligible for deduction u/s 80CCC.
Amount of Deduction:
The amount of deduction u/s 80CCC together with deduction available
u/s 80C, 80CCD cannot exceed more than Rs. 1 Lakh. Where deduction has
been allowed u/s 80CCC, deduction u/s 80C will not be available in
respect of the payment towards such annuity plan.
Pension received from or amount received on surrender of such annuity pension plan is taxable: Section 80CCC(2) provides if
the assessee or his nominee receives any amount (including Interest or
bonus), standing to the credit of the assessee in respect of which
deduction u/s 80CCC has been allowed to him:
(a)on account of the surrender of the annuity plan, whether in whole or in part in any previous year; or
(b) as
pension from the annuity plan; such amount shall be included in the
total income of the assessee or his nominee in the year of receipt.
Thus there is no exemption available on the amount received as pension
or on surrender in case of such annuity plans of pension in respect of
which deduction u/s 80CCC(1) has been allowed.