Deduction in respect of contribution to certain pension Funds Section 80CCC
Deduction in respect of contribution to certain pension Funds Section 80CCC
In general in case of life insurance, lump sum amount is paid to the policyholder but in some of the life policies pension is given instead of lump sum amount e.g. Jeevan Suraksha policy. If any person has paid premium for such policy, deduction is allowed under section 80CCC instead of section 80C. Deduction is allowed only to an individual and individual can take the policy only in his name (and not in name of spouse or children). Any pension received shall be taxable under the head Other Sources. If the assessee has surrendered the policy, amount received shall be taxable under the head Other Sources.
e.g. (i) Mr. X has taken Jeevan Suraksha Policy in his name and has paid premium of Rs.10,000, in this case deduction allowed shall be Rs.10,000
(ii) Mr. X has taken Jeevan Suraksha Policy in the name of Mrs. X and has paid premium of Rs.10,000, in this case deduction is not allowed.
(iii) Mr. X has taken Jeevan Suraksha Policy in the name of his dependant son and has paid premium of Rs.10,000, in this case deduction is not allowed.
As per section 80CCE, Maximum Deduction allowed u/s 80C + 80CCC + 80CCD shall be Rs.1,50,000. Illustration : Mr. X has income under the head business/profession Rs.3,35,000.
He has made the following investments:-
• NSC Rs.10,000
• Investment in post office 5 year time deposit account Rs.15,000
• Payment of premium for life policy in the name of major married independent son on 10.10.2019 Rs.30,000 (sum assured Rs.90,000)
• Paid premium of 11,000 for Jeeven Suraksha policy taken in name of Mr. X on 11.11.2019. Compute income tax liability for A.Y 2020-21.
Solution:
Income under the head Business/Profession 3,35,000.00
Gross Total Income Less: Deduction u/s 80C | 3,35,000.00 |
NSC | (10,000.00) |
Investment in 5 years post office | (15,000.00) |
Payment of premium of LIC | (9,000.00) |
Less: Deduction u/s 80CCC | (11,000.00) |
Total Income | 2,90,000.00 |
Illustration : The gross total income of Mr. X for the p.Y.2018-19 is following investments/payments (1) Contribution to PPF | 90,000 |
(2) Payment of tuition fees to Apeejay School, New Delhi, for education of his son studying in Class XI | 45,000 |
(3) Repayment of housing loan taken from Standard Chartered Bank | 25,000 |
(4) Contribution to approved pension fund of LIC Compute the eligible deduction under Chapter VI-A for the P.Y.2018-19. Solution: Computation of deduction under Chapter VI-A for the P.Y.2018-19 | 10,000 |
Particular | |
Deduction under section 80C | |
(1) Contribution to PPF | 90,000 |
(2) Payment of tuition fees to Apeejay School, New Delhi, for education of his son studying in Class | 45,000 |
XI | |
(3) Repayment of housing loan | 25,000 |
1,60,000 | |
Deduction under section 80CCC | |
(I) Contribution to approved pension fund of LIC | 10,000 |
1,70,000 | |
As per section 80CCE, the aggregate deduction under section 80C, 80CCC and 80CCD has to be | |
restricted to Rs.1,50,000 | |
Deduction allowable under Chapter VI-A for the P.Y.2018-19 | 1,50,000 |
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