Section 80CCC of ITA, 1961 : Section 80Ccc: Deduction In Respect Of Contribution To Certain Pension Funds

Explanation using Example

Let's consider Mr. Sharma, a software engineer, who has a taxable income of ₹8,00,000 for the financial year 2022-23. To save on taxes and plan for his retirement, Mr. Sharma decides to invest ₹1,50,000 in a pension plan offered by a registered insurer. According to Section 80CCC of the Income-tax Act, 1961, Mr. Sharma is eligible to claim a deduction for this investment while computing his total income.

When he files his income tax return, he can reduce his taxable income by ₹1,50,000, the amount he invested in the pension plan. This brings down his taxable income to ₹6,50,000. However, if in a future year, he decides to surrender the plan or starts receiving pension, the amount received will be taxable in the year of receipt, as per the provisions of Section 80CCC(2).