Income Tax Section 80C, 80CCC, 80CCD, 80CCE

Section 80C. – Section 80C was inserted from assessment year 2006-2007. It provides deductions from gross (total) income for qualified amounts paid or deposited by the assessee in the previous year.

Main Provisions.

1. The deduction is available only to an individual or a HUF from the gross total income,

2. The deduction is allowed irrespective of whether such amount is paid or deposited by the taxpayer out of his income chargeable to tax,

3. The deduction is available on the basis of specified qualifying investments/contributions/payments made by the taxpayer during the previous year,

4. The maximum amount deductible under section 80C is Rs. 1,00,000. Also the total amount of deductions under sections 80C, 80CCC and 80CCD is Rs. 1,00,000.

Gross Qualifying Amount for the Deduction
Following nature of payments are qualifying amounts

1. Life insurance premium subject to 20 per cent of sum assured,

2. Payment in respect to non-commutable deferred annuity,
   Deferred annuity deducted from Government employee (subject to maximum of 20 per cent of salary),

3. Contributions (not the repayment of loan) towards statutory provident fund and recognised provident fund,

4. Contribution towards an approved superannuation fund,
   Subscription to National Saving Certificates, VIII Issue,

5. Contribution to ULIP (unit-linked insurance plan) of Unit Trust of India and or LIC Mutual Fund,

6. Payments for notified annuity plan of LIC including New Jeevan Dhara, New Jeevan Akshary, New Jeevan Dhara I, New Jeevan Akshary I, II and III.

7. Subscription towards notified units of Mutual Fund or UTI,
   Contribution to notified pension fund set up by Mutual Fund or UTI,

8. Any sum paid (and accrued interest) as subscription to Home Loan Account Scheme of National Housing Bank or contribution to any pension fund of National Housing Bank,

9. Any sum paid as subscription to any scheme of public sector company engaged in providing long term finance for purchase/construction of residential houses or from the housing board in India engaged in planning and development of cities.

10. Any sum paid as tution fees for the admission or otherwise to any university/college/educational institution in India for full time education for any two children of the taxpayer,

11. Any payment towards the cost of construction/purchase of residential property including payment of loan taken from Government bank, cooperative bank, LIC, National Housing Bank, taxpayer’s employer where such employer is a public company, public sector company, university or cooperative society,

12. Amount invested in approved debentures of, and equity shares in, a public company engaged in  infrastructure including power sector or units of mutual fund utilized for infrastructure,

13. Amount in fixed deposits of 5-years or more with a scheduled bank in accordance with a scheme framed and notified by the Central Government (applicable from assessment year 2007-2008),

14. Subscription to any notified bonds of National Bank for Agriculture or Rural Development (applicable from assessment year 2008-2009),

15. 5-year time deposit in an account under Post Office Time Deposits Rules 1981, and

16. Deposit in an account under the Senior Citizen Saving Scheme Rules, 2004.

Section 80CCC. Deduction for Contribution to Pension Funds -Section 80CCC provides deductions from gross (total) income for amounts paid or deposited by the assessee to any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund referred to in clause (23AAB).

Main Provisions.

1. The deduction is available to an individual who is resident or non-resident, Indian citizen or foreign citizen

2. The deduction is allowed only if such amount is paid or deposited by the taxpayer out of his income chargable to tax,

3. The maximum amount deductible under section 80C is Rs. 1,00,000. Also the total amount of deductions under sections 80C, 80CCC and 80CCD is Rs. 1,00,000.

4. Surrender value received is taxable in the year of receipt in the hands of the assessee or nominee.

Section 80CCD. Deduction for contribution to pension scheme of Central Government. – Deduction is allowed to an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004, has in the previous year paid or deposited any amount in his account under a pension scheme notified or as may be notified by the Central Government. However, the deduction is limited to 10 per cent of his salary in the previous year.

Where, the Central Government or any other employer makes any contribution to the employee’s account, the employee shall be allowed a deduction in the computation of his total income. However, the deduction is limited to 10 per cent of his salary in the previous year.

If after claiming the deduction, any amount together with interest or bonus accrued is received by the assessee or his nominee in whole or in part, in any previous year, is taxable of the assessee or his nominee, as the case may be, if it is received –

1. On account of the closure or opting out of the pension, or

2. As pension received from the annuity plan purchased or taken on such closure or opting out.

Where any amount paid or deposited by the assessee has been allowed as a deduction under section 80CCD —

1. No rebate with reference to such amount shall be allowed under section 88;

2. No deduction with reference to such amount shall be allowed under section 80C.

Explanation. For the purposes of 80CCD, “salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

Section 80CCE. – The aggregate amount of deductions under section 80C, section 80CCC and section 80CCD shall not, in any case, exceed Rs. 1,00,000.