1. Section 80CCC of the Income Tax Act, 1961 provides for deduction of the whole amount up to Rs 1.5 lakhs paid or deposited by an individual to various pension funds in the previous year.
2. Under this section, deductions are allowed to be used in the computation of the taxpayer’s total income in a given financial year.
3. This deduction can be availed of only if the contribution is made to an annuity plan from either Life Insurance Corporation of India or a different insurer.
4. Any amount received from the pension fund in the form of surrender or pension is to be considered as the taxpayer’s income and is liable for taxation in the same financial year.
5. There are two exceptions to this rule i.e. a rebate or deduction with reference to the amount shall not be allowed under section 88 for any assessment year ending before 1st April 2006 or a deduction with reference to such amount shall not be allowed under section 80C for any assessment year beginning on or after 1st April 2006.
6. Furthermore, any amount paid or deposited by the taxpayer which is taken into account for the purpose of calculating the deduction under 80CCC shall not be eligible for deduction under section 80C in any assessment year beginning on or after 1st April 2006.
7. This section provides taxpayers with the opportunity of building up their corpus for retirement fund, which in turn may provide them with steady sources of income.
8. Moreover, with the deduction of up to 1.5 lakhs available, individuals can now live with a peace of mind, knowing that funds will be available for them in their retirement periods for their sustenance.
9. With the provision of deduction under this section, individuals need to plan their finances judiciously so as to maximize the amount available for their sustaining fund, as there is a cap of 1.5 lakhs on the deduction amount.
10. Accordingly, individuals are encouraged to seek financial advice from experts, who can help maximize their deductions from the total income and plan their resources to avail maximum benefits under this section.
In conclusion, Section 80CCC of the Income Tax Act provides taxpayers with an invaluable opportunity to create a retirement fund which, coupled with other deductions, can be utilized for their benefit in the present and future. The tax benefit of up to 1.5 lakhs provided by this section provides for a steady and reliable source of income with the added security of a pension fund. Knowing all the facts of Section 80CCC and utilizing the maximum benefit from it is the responsibility of taxpayers, who are encouraged to seek professional advice in this regard and plan their finances judiciously.
Author Bio
