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ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
Sections 80C, 80CCC, and 80CCD focus on deductions for investments and pension plans, while 80D deals with medical insurance and healthcare expenses.
Understanding the distinctions between Section 80C, 80CCC, 80CCD, and 80D is crucial for effective tax planning. Whether you are looking to invest in pension funds, secure your family’s future, or cover health-related expenses, knowing how to utilize these sections can maximize your deductions and minimize your tax liability.
Exploring different income tax sections can be daunting, but understanding these sections can lead to significant savings. Sections 80C, 80CCC, 80CCD, and 80D of the Income Tax Act offer valuable deductions that can reduce taxable income. Let us take a deep dive to understand the benefits and deductions under 80C, 80CCC and 80CCD sections thoroughly.
Under Section 80C of the Income Tax Act, individuals can claim deductions worth ₹1,50,000 on their taxable income. Both individuals and the Hindu Undivided Family (HUF) are eligible for deductions and benefits under Section 80C. Any Indian citizen with an income higher than the exempted limit per the act can seek exemptions under this section.
Section 80CCC of the Income Tax Act, 1961, in India, pertains to tax deductions available for contributions made towards certain pension funds. This section allows individuals to claim a deduction for contributions made to annuity plans of insurance companies for receiving a pension.
Section 80CCD of the Income Tax Act, 1961, provides tax deductions for contributions made towards pension schemes notified by the Central Government. This section aims to encourage individuals to save for their retirement by offering tax benefits on their contributions. It is further classified into three categories:
Section 80CCD (1) allows for a deduction of up to 10% of an individual’s salary (basic + dearness allowance) or 20% of their gross total income for self-employed individuals. The maximum deduction is capped at ₹1.5 lakh, which is included within the overall limit of Section 80C.
Section 80CCD (2) offers an additional deduction on the employer’s contribution to the pension scheme, up to 10% of the employee’s salary (basic + dearness allowance). This benefit is over and above the limits of Section 80C and 80CCD (1), encouraging employer participation in ensuring employees’ financial security post-retirement.
Section 80CCD (1B) provides an extra deduction of up to ₹50,000 for contributions to the National Pension System (NPS) beyond the ₹1.5 lakh limit of Section 80C and 80CCD (1). This section aims to provide additional tax-saving opportunities and further promote investment in retirement savings.
Section 80D of the Income Tax Act, 1961, provides deductions for premiums paid towards health insurance policies and expenses incurred on medical expenses. This section is designed to encourage individuals to secure their health and that of their family members through health insurance.
The main difference between 80C and 80CCC is that Section 80C covers a wider range of investments and expenses, while Section 80CCC specifically targets deductions for pension plans from life insurance companies. Similarly, there are differences between Section 80CCC and 80CCD. To understand these sections better, it is important to know their basic differences. Let us take a quick look at these:
| Aspect |
Section 80CCC |
Section 80CCD |
| Objective |
Deduction for contributions to certain pension funds |
Deduction for contributions to the National Pension System (NPS) and Atal Pension Yojana (APY) |
| Applicable to |
Individuals (both salaried and self-employed) |
Individuals (both salaried and self-employed) |
| Deduction Limit |
Up to ₹1.5 lakh |
Up to 10% of salary (salaried) or 20% of gross total income (self-employed) under 80CCD(1), and an additional ₹50,000 under 80CCD(1B) |
| Overall Limit |
Included in the overall limit of ₹1.5 lakh under Section 80CCE |
80CCD(1) is included in the overall limit of ₹1.5 lakh under Section 80CCE; 80CCD(1B) is an additional ₹50,000 |
| Additional Deduction |
No additional deduction |
Additional ₹50,000 under Section 80CCD(1B) |
| Employer Contribution |
Not applicable |
Deduction for employer’s contribution under Section 80CCD(2), which is over and above the ₹1.5 lakh limit under 80CCE |
| Eligible Contributions |
Premiums paid for annuity plans by insurers like LIC |
Contributions to NPS Tier I accounts and Atal Pension Yojana (APY) |
| Lock-in Period |
Depends on the specific pension fund policy |
Lock-in until retirement (typically until age 60) |
| Taxability on Withdrawal |
The pension received is taxable as per the individual’s tax slab |
60% of the NPS corpus at retirement is tax-free; the remaining 40% must be used to purchase an annuity, which is taxable as per the individual’s tax slab |
| Type of Account |
Annuity plans from life insurance companies |
NPS Tier I accounts and APY |
Here are some common deductions under Section 80C:
The maximum deduction allowed under Section 80CCC is ₹1.5 lakh (₹150,000) in a financial year. This limit is a part of the overall limit of ₹1.5 lakh under Section 80C, which includes deductions under Sections 80C, 80CCC, and 80CCD(1).
For instance, if an individual, Mr. A, invests ₹1,00,000 in an annuity plan of an insurance company, he can claim this amount as a deduction under Section 80CCC. Suppose Mr. A invests an additional ₹50,000 in another eligible annuity plan. In that case, he can claim a total deduction of ₹1,50,000 under Section 80CCC for that financial year, provided this is within the overall limit of ₹1.5 lakh under Section 80C.
Individuals can claim deductions under both Section 80CCD(1) and 80CCD(1B) for their own contributions, and salaried individuals can also claim deductions under Section 80CCD(2) for their employer’s contribution. Contributions to Tier I accounts of the National Pension System (NPS) qualify for deductions under this section, but contributions to Tier II accounts do not.
Also, Atal Pension Yojana (APY) contributions qualify for deductions under these sections.
Under Section 80D, you can claim deductions for premiums paid towards health insurance policies for yourself, your spouse, dependent children, and parents. An additional deduction of up to ₹5,000 is available for expenses incurred on preventive health check-ups for yourself, spouse, dependent children, or parents.
1
Yes, you can claim deductions under multiple sections simultaneously (80C, 80CCC, and 80CCD), but the combined limit for 80C, 80CCC, and 80CCD(1) is ₹1.5 lakh per financial year.
2
Yes, you can claim deductions under both 80C and 80CCD, but the total deduction under 80C, 80CCC, and 80CCD(1) should not exceed ₹1.5 lakh. Additionally, an extra ₹50,000 can be claimed under 80CCD(1B).
3
The maximum deduction allowed under Section 80CCC is ₹1.5 lakh per financial year, which is part of the overall limit of ₹1.5 lakh under Section 80CCE.
4
Yes, there is a separate limit for deductions under Section 80CCD(1B), which allows an additional deduction of up to ₹50,000 over and above the ₹1.5 lakh limit under Section 80CCE.
5
Yes, you can claim deductions for both your contributions under Section 80CCD(1) and your employer’s contributions under Section 80CCD(2), with the employer’s contribution deduction being over and above the ₹1.5 lakh limit under Section 80CCE.
6
Investments eligible for deduction under Section 80C include life insurance premiums, Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificates (NSC), tax-saving fixed deposits, Equity Linked Savings Schemes (ELSS), principal repayment on home loans, tuition fees for children, and contributions to the Sukanya Samriddhi Yojana.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
