Part 80CCC: Tax Deduction for Contribution to Pension Funds

Part 80CCC was launched in order to encourage taxpayers to spend money on Pension Funds and safe their future. Part 80CCC gives for Revenue Tax Deduction for contribution to Pension Funds beneath Chapter VI-A from the Gross Whole Revenue of a taxpayer for the monetary yr by which the contribution is being made.

Part 80CCC doesn’t restrict itself solely to Resident People and due to this fact,  Non-Resident People contributing to Pension Funds may also declare deduction beneath Part 80CCC.

If a taxpayer has paid any quantity to provoke or proceed any annuity plan of any insurance coverage firm for receiving any pension, the taxpayer can be allowed a deduction for the quantity paid from the Gross Whole Revenue. This deduction is barely obtainable to a person taxpayer and to not HUF.

It’s pertinent to notice right here that deduction beneath Part 80CCC can solely be claimed within the yr by which the quantity has been paid. This may be defined with the assistance of an instance. If a taxpayer forgets to contribute to a pension fund in 2013 and in 2014 he pays the quantity for each 2013 in addition to 2014, he can not declare deduction beneath this part 2013 and might declare deduction in 2014 for the whole quantity paid in 2014 on the time of submitting of revenue tax return.

Deduction for contribution Annuity Plan of Insurance coverage Firm is allowed beneath Part 80CCC. Deductions for Annuity Plans of apart from Insurance coverage Firms is allowed beneath the next sections:-

  • Part 80CCD(1) & 80CCD(2): Deduction for Contribution to NPS
  • Part 80C: Deduction for Contribution Pension Plan of UTI/Mutual Fund

Part 80CCC – Most Deduction allowed

The utmost deduction allowed beneath Part 80CCC has been elevated from Rs. 1 Lakhs to Rs. 1.5 Lakhs. This enhance in deduction was introduced by the Finance Minister Arun Jaitley in Price range 2015.

If the quantity deposited in a pension fund has been claimed as a deduction beneath Part 80CCC, it shouldn’t be claimed as a deduction beneath some other part of the Revenue Tax Act.

  • Advisable Learn: 8 methods to avoid wasting tax via Tax Planning

Tax therapy on receiving again the Funds invested

The quantity that’s deposited within the pension fund is acquired again by the taxpayer after a specified time as pension on a month-to-month foundation. In case the taxpayer surrenders the coverage, the quantity deposited by him would even be returned again with curiosity.

The quantity so acquired as annuity or on give up of the coverage by the taxpayer himself or by the nominee which has earlier been claimed as a deduction beneath Part 80CCC can be taxable on the time of receipt as per the Revenue Tax Slabs of the taxpayer for the yr by which the quantity is acquired.

  • Advisable Learn: Revenue Tax Slab Charge

From the quantity acquired from the Pension Fund, sure exemptions are additionally allowed beneath Part 10 earlier than the levy of revenue tax.

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