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Retirement is a crucial phase for every individual who needs to secure a monetary backup. Financial security such as pension and insurance aids retired individuals significantly.
Section 80CCC of the Income Tax Act extends individuals with tax benefits over pension plans with a life insurer in India to support this need.
However, there are specific terms that need to be fulfilled by taxpayers. Keep reading to learn more about this section of the Income Tax Act.
Section 80CCC of the Income Tax Act 1961 allows individuals to claim tax exemptions against the contribution made to specific pension funds.
An individual can claim deductions up to ₹1,50,000 against the purchase of a public insurance policy or renewing an existing policy, specially annuity plan of Life Insurance Corporation of India for receiving pension from the fund referred to in clause 23(AAB) of section 10.
For instance, one can claim deductions when purchasing a life insurance policy from LIC or relevant public insurance companies.
This section also allows deductions against periodical annuity as per Section 10 (23AAB).
However, the pension amount and bonus or interest accumulated on this annuity will be applicable for taxation in the receipt year.
Individuals should check terms under Section 80CCC of the Income Tax Act. It is clubbed with the rules under sections 80CCD and 80C.
Hence, it is crucial to read the terms against this section on the official website. Additionally, taxpayers need to check the eligibility parameters to streamline the filling.
The eligibility parameters to claim deductions under Section Section 80CCC are as follows.
Individuals must follow certain factors such as -
Let's check the crucial terms applicants need to know before filing a tax.
The conditions that a taxpayer must fulfill to claim deduction under Section 80CCC are as follows.
Let’s check how to claim the deductions and 80CCC tax benefits. This will help you understand the concept better.
After investing the funds as per Section 80CCC, individuals can file their taxes after maturity. They have to visit the official Income Tax website for tax filing.
They can claim the tax benefits on the amount invested, not on interest or bonus.
The Government specifies that the 80CCC deduction limit is up to ₹1,50,000. However, a taxpayer needs to qualify the eligibility parameters and terms specified under this section.
Let’s take an example to understand this concept.
For instance, an individual has a taxable income of ₹5,00,000. This brings down the net taxable income to ₹3,50,000.
Section 10(23AAB) allows tax exemptions against income earned by a pension fund. This clause has no relation with the taxpayer.
The accumulated funds paid to a policyholder as a pension is taxable.
This is some useful data on Section 80CCC of the Income Tax Act. Individuals should also check the income tax 80CCC exemption limit and related terms before tax filing.
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