Income tax deductions | Pension and annuity plans

Section 80CCC: Deduction for Contributions to Certain Pension Funds

Section 80CCC of the Income-tax Act, 1961 allowed individuals to deduct qualifying contributions to specified pension annuity plans of LIC or another insurer. The deduction was subject to a combined ceiling of Rs. 1,50,000 under Section 80CCE and was generally available only under the old tax regime.

What is Section 80CCC?

Section 80CCC was a Chapter VI-A provision allowing an individual assessee to deduct money paid or deposited out of taxable income to purchase or maintain a qualifying annuity contract intended to provide pension. The contract had to be with the Life Insurance Corporation of India (LIC) or another insurer, and relate to a pension fund described in Section 10(23AAB).

The term annuity plan generally refers to an insurance contract designed to provide periodic pension or annuity payments, subject to the terms of the policy. Not every life insurance policy or retirement product qualifies under this provision.

Eligibility and conditions

• Eligible taxpayer: An individual; the deduction was not available to a Hindu undivided family, company or firm.
• Eligible payment: Premium or contribution paid to effect or keep in force a qualifying pension annuity plan issued by LIC or another insurer.
• Source of funds: Payment must be made out of income chargeable to tax.
• Excluded amounts: Interest or bonus accrued or credited to the account is not treated as a fresh deductible contribution.
• Tax regime: The Section 80CCC deduction was not available under the default new tax regime governed by Section 115BAC of the 1961 Act.

Deduction limit under Sections 80CCC and 80CCE

Under the updated provisions of the 1961 Act, the maximum standalone deduction under Section 80CCC was Rs. 1,50,000 in a previous year. However, Section 80CCE imposed a combined Rs. 1,50,000 ceiling on deductions under Sections 80C, 80CCC and 80CCD(1). These are not three separate Rs. 1,50,000 allowances.

Example: If an individual claimed Rs. 1,00,000 under Section 80C and paid Rs. 80,000 into a qualifying Section 80CCC annuity plan, the Section 80CCC deduction could be restricted to Rs. 50,000 because the combined limit was Rs. 1,50,000.

Explanation of Section 80CCC(1), (2) and (3)

Section 80CCC(1): Contribution deduction

Sub-section (1) granted the deduction to an individual for qualifying payments or deposits made in the previous year towards a pension annuity contract, excluding accrued interest and bonuses and subject to the statutory limit.

Section 80CCC(2): Tax on surrender or pension receipts

Where a deduction had been allowed, amounts received by the individual or nominee on full or partial surrender of the annuity plan, or as pension from the plan, were deemed income of the recipient for the year of receipt. The provision included the related accrued interest or bonus in the amount covered by this tax treatment. The applicable tax rate depended on the recipient's circumstances and the law for that year.

Section 80CCC(3): No double tax benefit

An amount considered for deduction under Section 80CCC could not also be deducted under Section 80C. The provision also contained a historical restriction concerning the former rebate under Section 88 for assessment years ending before 1 April 2006.

Old and new income tax regimes

For assessment years governed by the Income-tax Act, 1961, an eligible individual could generally claim Section 80CCC under the old tax regime, subject to the deduction conditions. Under the new regime in Section 115BAC, this deduction was generally unavailable. Taxpayers needed to exercise the old-regime option in accordance with the return-filing rules applicable to them.

For income earned from 1 April 2026, apply the Income-tax Act, 2025 and the corresponding regime-specific rules rather than assuming the old section numbering or deduction treatment continues unchanged.

Documents and practical checks

1. Confirm that the annuity contract is a qualifying insurer pension plan.
2. Keep the policy document, premium receipts and proof of payment.
3. Identify the correct financial year and applicable Income-tax Act.
4. Check whether the chosen tax regime permits the deduction.
5. Check other eligible investments and contributions against the combined limit.
6. Retain surrender and pension payment statements for reporting taxable receipts.

Frequently asked questions

Can an HUF claim Section 80CCC?

No. Section 80CCC of the 1961 Act applied to individuals only.

Is Section 80CCC separate from the Section 80C limit?

No. The combined ceiling under Section 80CCE applied to Sections 80C, 80CCC and 80CCD(1).

Is pension received from a Section 80CCC plan taxable?

Section 80CCC(2) provided for taxation of qualifying pension or surrender receipts where the related deduction had been allowed.

Can the same contribution be claimed under both 80C and 80CCC?

No. Section 80CCC(3) prevented double deduction for the same amount.

Official legal references

• Income Tax Department: Section 80CCC, Income-tax Act, 1961
• Income Tax Department: Deductions from gross total income
• Income Tax Department: Old versus new tax regime FAQs
• Income Tax Department: Official e-Filing portal
• Income Tax Department: Acts, rules and tax legislation

Updated: 10 October 2026. This article explains Section 80CCC as it operated under the Income-tax Act, 1961 and highlights the transition to the Income-tax Act, 2025. For an actual tax filing, verify the applicable legislation, tax year and current official instructions.