DEDUCTION UNDER SECTION 80CCC

Deduction in respect of contribution to certain pension funds.

As per section 80CCC, 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 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 one lakh rupees in the previous year.

Where any amount paid or deposited by the assessee has been taken into account for the purposes of section 80CCC, a rebate/ deduction with reference to such amount shall not be allowed under section 88 up to assessment year 2005-06 and under section 80C from assessment year 2006-07 onwards.

Limit- Deduction shall exclude interest or bonus accrued or credited to the employee’s account, if any and shall not exceed Rs. 1 lakh  and The aggregate amount of deduction under sections 80C, 80CCC and sub section (1) of Section 80CCD shall not exceed Rs.1,50,000/- (Section 80CCE). Please note that Limit of deduction Under section 80CCC is enhanced to Rs. 1.50 from One Lakh with effect from assessment year 2016-17 and for subsequent assessment years. Limit of deduction under 80CCC raised to Rs. 1.50 Lakh

DEDUCTION UNDER SECTION 80CCD

Deduction in respect of contribution to pension scheme of Central Government.

Pension

Section 80CCD(1) allows an employee, being an individual employed by the Central Government or by any other employer on or after 01.01.2004, or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide  Notification No. F.N. 5/7/2003- ECB&PR dated 22.12.2003 (National Pension System –NPS) or as may be notified by the Central Government.

As per Section 80CCD(2), where any contribution in the said pension scheme is made by the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year.

Section 80CCE provides that the aggregate amount of deductions under section 80C, section 80CCC and section 80CCD shall not, in any case, exceed Rs. 1,50,000

With effect from assessment year 2015-16, amended sub-section (1) has clarified that a non-government employee can claim deduction under section 80CCD even if his date of joining is prior to January 1, 2004.

With effect from the assessment year 2012-13 section 80CCE is amended so as to provide that contribution made by the Central Government or any other employer to a pension scheme under sub-section (2) of section 80CCD shall not be included in the limit of deduction of Rs. 1,50,000 provided under section 80CCE.

With effect from assessment year 2016-17, sub-section (1A) of Section 80CCD which laid down maximum deduction limit of Rs. 1,00,000 (under sub-section (1)) has been deleted.

Further, a new sub-section (1B) is inserted to provide for additional deduction to the extent of Rs. 50,000. The additional deduction is not subject to ceiling limit of Rs. 1,50,000 as provided under Section 80CCE.

However, it is to be noted that addition deduction of Rs. 50,000 shall not be allowed in respect of contribution which is considered for deduction under Section 80CCD(1), i.e., within limit of 10% of salary/gross total income

Any payment from NPS to an employee because of closure or his opting out of the pension scheme is chargeable to tax. However, with effect from the assessment year 2017-18, the whole amount received by the nominee from NPS on death of the assessee shall be exempt from tax.

Please note that In order to provide parity between an individual who is an employee and an individual who is self-employed, section 80CCD is amended with effect from Financial Year 2017-18 so as to increase the upper limit of ten per cent of gross total income to twenty per cent in case of individual other than employee. Budget 2017: Section 80CCD limit for self-employed individual increased to 20% 

Also Read- Sec. 80CCD- Additional deduction for National Pension System contribution.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

(Republished with Amendments)

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123 responses to “Income Tax Deduction Under section 80CCC and 80CCD”

  1. Sir,
    I have invested 50k per year from 2010 to 2016 in a Pension super plan of HDFC and in the last year I had surrendered and I got around 4.23 lakhs. Now please let me know the tax impact for the surrender value received. I would have taken tax benefit initially for couple of years and thereon bcoz of my housing loan, I could not utilise the tax benefit also for investing in Pension Super plan from HDFC. Kindly let me know the tax effect on this transaction.

  2. hitesh suthar says:

    I am a central government employee joined in 1985.I am depositing rs150000 in GPF. Additional RS 50000 can be claimed for deposit in nps.plz suggest me

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