Maximum tax deduction allowed under Section 80CCC


Section 80CCC of income tax is related to income tax deduction for the contributions to pension funds, this section is allowed only for an individual taxpayer and not to Hindu Undivided Family. Even non-resident individual can contribute and claim under this section 80CCC.

Also read: Steps to open NPS account online using e-NPS

The section 80CCC provides deduction to a taxpayer for amount paid in any annuity plan of LIC or any other insurer in India.


Various sub-sections under section 80CCC

Section 80CCD(1): Maximum deduction allowed under this sub section is 10% of salary (For Salaried) and 10% of gross total income (For self-employed) or Rs 1,50,000 whichever is less. A new section 80CCD(1B) has been introduced recently for additional deduction for retirement saving under NPS account. 80CCD(1B) deduction can help taxpayers to save tax up to Rs 15,450 in case you are in the 30% tax slab. Maximum deduction allowed under this section 80CCD(1B) is Rs 50,000.

Section 80CCD(2):  Maximum deduction allowed for employer’s contribution to employee’s pension account is up to 10% of the salary of the employee.

Important points about Section 80CCC

  • Section 80CCC is available to an individual whether he/she is resident or non-resident.
  • Section 80CCC can only be claimed in the same year in which the amount is paid or deposited.
  • For FY 2015-16 (assessment year 2016-17) – Total Deduction under Section 80C, 80CCC, 80CCD(1) and 80 CCD(1B) cannot exceed Rs 2,00,000.
  • Also note that whether it is the surrender value or the pension amount – both the amounts are taxable in the hands of individual in the year in which they are received.

Image courtesy: Stuart Miles []

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