To aid and enable taxpaying individuals to claim deductions on their income tax contributions when money is spent on purchasing a new policy or renewing existing policies, provisions are in place as laid out under Section 80CCC. As per this Section, taxpayers are allowed up to 1,50,000 INR in maximum deduction on the cost incurred towards the policy.
However, deductions can be claimed only if the policies provide pension or periodical annuity.

To be eligible for claiming tax exemptions under 80 CCC, any taxpaying individual should have made contributions in fixed return policies offered by any registered insurance firms in India. Both NRIs and resident Indians are allowed as individuals, with the exception being the Hindu Undivided Family (HUF).

As further clarified in Section 10 (23AAB) to be able to claim any deductions under 80 CCC, the fund must have been set-up before August 1996, and the taxpayer should have made the investments with the intention of receiving pension income in the future. 

The interests or bonuses accrued from the policy cannot be claimed for deductions, and all proceeds from the policy will also be taxable. The policy’s surrender value, whether in part or full, will be treated as income and taxed accordingly.

Considerations for Availing Tax Deductions Under Section 80 CCC

For availing yearly tax exemptions against insurances and policy contributions, the premium has to be paid each year separately. It is important to note that these provisions can be only applied for the payments made for the valuation period of the previous year. This means that if an individual has chosen to make a payment just once for a multi-year coverage, then the exemption can be claimed only for the year the premium was paid.

In order to calculate the total available limit, the deductions under this section are combined with the available tax deductions under Sections 80 C and 80 CCD. You can use the tax deduction calculator to understand the maximum amount you can claim for deductions under Section 80 CCC.

Retirement schemes and pension schemes offered by mutual fund companies are not covered under this section, and the National Pension Scheme & the Atal Pension Yojana ensure tax benefits under Section 80 CCD of the Income Tax Act.

It is also worth noting that any Section 80CCC deductions should be against the payment made from income chargeable for tax. On the contrary, deductions under Section 80C can come from the part of income which is not chargeable for tax.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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