80CCC

What is Deduction Under Section 80CCC?

Section 80CCC deduction: eligibility, limit with 80C/80CCD(1), and taxability of pension or surrender proceeds. Know what qualifies under 10(23AAB).

Written by : Knowledge Centre Team

2026-01-11

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6 minutes read

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Section 80CCC of the Income-tax Act, 1961, helps individuals reduce their taxable income by claiming a deduction for amounts paid towards eligible pension/annuity plans offered by insurers. In this guide, the focus is on what qualifies under Section 80CCC, who can claim it, how the 80CCC deduction limit works alongside Sections 80C and 80CCD(1), and how the pension/withdrawal amounts are taxed when received. It also explains the relevance of Section 10(23AAB), which is the condition linked to the eligible pension funds referred to in Section 80CCC.

Key Takeaways

  • Section 80CCC deduction is available only to individual taxpayers (not HUFs) for eligible pension/annuity plan payments

  • The deduction under 80CCC is not an extra ₹1.5 lakh on its own; it falls within the combined ceiling of ₹1.5 lakh for 80C + 80CCC + 80CCD(1)

  • Only amounts actually paid (premium/contribution) qualify;, bonus/interest components are not what you claim as “deduction”

  • Pension/annuity received, and any amount received on surrender/withdrawal, becomes taxable in the year you receive it (even if you claimed 80CCC earlier)

  • Eligibility is linked to schemes/funds referred to in Section 10(23AAB), so product selection and documentation (premium receipts/policy proof) matter for correct claiming

What is 80CCC in Income Tax: Income Tax Deductions on Pension Fund Contributions?

Section 80CCC of the Income-tax Act, 1961 allows an individual to claim a deduction for amounts paid or deposited towards an annuity (pension) plan, for receiving a pension from a fund referred to in Section 10(23AAB).

The deduction you claim under Section 80CCC is included within the overall combined limit of up to ₹1.5 lakh available under Sections 80C + 80CCC + 80CCD(1) (as per Section 80CCE).

So, to avail of this deduction, you must buy an eligible pension/annuity plan or renew a policy that will offer you a pension.

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Terms and Conditions of Section 80CCC Contribution to Pension Fund

Deduction under section 80CCC of the Income Tax Act is available to taxpayers who meet the following conditions:

  • A maximum deduction under 80CCC is available within the overall Section 80CCE combined cap of ₹1.5 lakhs for 80C + 80CCC + 80CCD(1)
  • The assessee (taxpayer) has to be an individual for the deduction
  • The amount has been paid out of your (taxpayer) taxable income
  • You have invested the amount in a pension plan from one of the life insurance companies
  • The amount you will receive as a pension from such pension deposits will become part of your taxable income
  • The amount you receive from such a policy for which you had availed a deduction under section 80CCC, after the surrender of the policy will be a part of your taxable income
  • Investments before April 2006:
    • Rebate under Section 88 is not available for investments in annuity plans made before 1 April 2006
    • Amount claimed under 80CCC should not be claimed again under Section 80C for any AY beginning on/after 1 April 2006


Who is Eligible to Claim a Deduction Under Section 80CCC?

You can claim a deduction under section 80CCC if you meet the following conditions:

  • You are filing your ITR as an individual taxpayer
  • You paid/deposited the amount towards an eligible annuity/pension plan from an approved insurance provider
  • The deduction is available to both resident and non-resident taxpayers
  • Deduction under section 80CCC is not available to HUF

How Much Can You Claim Under Section 80CCC?

Let us see how much you can claim under Section 80ccc:

  • You can claim a maximum deduction of up to ₹1.5 lakh under section 80CCC
  • The deduction limit of section 80CCC is included with 80C and 80CCD. That is, you can avail of the maximum deduction by clubbing all the 3 sections
  • ₹1.5 lakhs = 80C+80CCC+80CCD(1)


When Can You Not Claim a Deduction Under Section 80CCC?

The following are the conditions where Section 80CCC deduction doesn’t apply:

  • If you receive any amount on surrender of the policy, then this amount is taxable in the year of receipt
  • Any interest received or accrued and any bonus from the policy, are not eligible for deduction. The deduction will be allowed, excluding these bonuses.
  • For investments linked to the pre-80C regime, rebate under Section 88 is not available for assessment years ending before 1 April 2006
 

What is Section 10 (23AAB)?

Clause 23AAB under section 10 defines the eligibility conditions for pension funds for deductions under section 80CCC of the Income Tax Act. As per this clause, the eligible funds will have to be:

  • Setup by an insurer  (approved by IRDAI) as a pension scheme
  • The contributions to these funds will be made by individuals to receive a pension
  • Approved by the Controller of Insurance or IRDAI (Insurance Regulatory & Development Authority of India)


Important Points Related to 80CCC Deduction

These are the salient points about deduction under Section 80CCC of the Indian Income Tax Act:

  • The deduction is available to individual taxpayers who wish to receive a pension from the fund or scheme
  • The funds that receive the invested money must be a part of a pension scheme from an approved life insurance provider
  • The maximum deduction you can avail of will be limited to the amount provided in the section (₹1.5 Lakh w.e.f. FY 2015-16 AY 2016-17)
  • The pension amount you receive from the policy will be taxable
  • If you surrender the policy, the surrender value received will become a part of your taxable income for that Financial Year

Conclusion

Section 80CCC can be a useful way to claim a tax deduction on eligible pension/annuity plan payments, but it works best when you treat it as part of the overall Chapter VI-A framework rather than a standalone bucket. Keep in mind that the deduction is available only to individuals, is subject to the combined limit with Sections 80C and 80CCD(1), and the pension/surrender proceeds are taxable when received. Before filing, verify that your plan qualifies as an eligible annuity/pension arrangement and retain premium/payment proofs to support the claim.

Glossary

  1. Annuity plan: Insurance contract paying a regular income (pension) after a lump sum/premiums are paid
  2. Section 80CCC: Deduction for amounts paid to eligible pension/annuity plans (within overall Chapter VI-A limits)
  3. Section 80CCE: Overall cap limiting combined deductions under 80C + 80CCC + 80CCD(1) to ₹1.5 lakh
  4. Section 10(23AAB): Clause defining eligible pension funds (and their income exemption) linked to 80CCC-qualifying schemes
  5. Surrender Value: Amount received when a policy is closed before maturity; may be taxable when received if deduction claimed
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FAQ on 80CCC

Income tax in India is based on incremental slab rates. The rate of tax is higher on higher incomes. You can also avail deductions from your taxable income if you invest in eligible instruments like PPF, NPS, ELSS, ULIPs, etc. Starting the financial year 2020-21, you have two tax regimes: old and new. The old tax regime applies all deductions to gross total income, while the new tax regime offers a lower rate of tax. So, if you are not investing in tax-saving instruments, you can file your tax as per the new tax regime.

Deduction of ₹1.5 under section 80C is available when you make investments or spend money under the heads mentioned in Chapter VI-A of the Income Tax Act, 1961. All tax-saving investments like PPF, NPS, ULIP, ELSS, etc. and all tax-saving expenses like children’s tuition fees, and registration expenses of a house property are part of Chapter VI A.

The best way to reduce your tax legally is to use tax-saving investments and plan your future taxes carefully. Tax-saving investments will help you reduce your taxable income in the present financial year. If you invest in options that enjoy tax exemptions on maturity values, you can also reduce your future tax outflow. 

The deduction under Section 80CCC is available within the overall limit of ₹1.5 lakh per financial year. This is not an additional, separate limit;, ₹1.5 lakh is the combined cap for deductions under Sections 80C, 80CCC, and 80CCD(1), as specified under Section 80CCE.

If you choose the new tax regime for FY 2025-26 (and onwards), you generally can’t claim the Section 80CCC deduction. The new regime applies lower slab rates but requires you to forgo most common deductions and exemptions, including many Chapter VI-A deductions.

Yes, payments towards eligible pension/annuity plans can be claimed as a deduction under Section 80CCC of the Income Tax Act, 1961, subject to the overall combined cap of ₹1.5 lakh along with deductions under Sections 80C and 80CCD(1).

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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