AMIT BAJAJ ADVOCATE

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. Herebelow 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 toards 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.