Difference between Section 80C and 80CCC

 

To encourage Indian taxpayers to save and invest the right way the government offers tax exemptions under various sections and subsections of the Income Tax Act, 1961. The most popular among these sections is 80C and among its subsections, 80CCC. 

There is a slight difference between Section 80C and 80CCC. Section 80C helps you to save tax up to Rs.46,800 annually by deductions on investments up to ₹ 1.5 lakh/year from your taxable income. Whereas in comparison, Section 80CCC also provides deductions of up to ₹ 1.5 lakh/year for your investments towards specific pension funds.

What is section 80C?

Did you notice the mention of section 80C of the Income Tax Act, 1961 in your life insurance policy documents or other investment plans? Simply put, 80C is the section of the Income Tax Act that allows deductions for life insurance plans, other investments, crucial expenditures etc. by any individual or a Hindu Undivided Family (HUF).

Under the provision of section 80C, tax exemptions are available for annual investments up to Rs 1.5 lakh. This amount can be claimed through a single investment or in a combination of investments considered eligible for this section. 

To claim the 80C deductions, you can  invest in traditional life insurances, ULIPs, capital guarantee solutions, employee provident funds, Public Provident Fund, equity-linked savings schemes, national savings certificates and 5-year deposits offered by the post office, senior citizen savings scheme, Sukanya Samriddhi Yojana, infrastructure bonds etc. Section 80C also provides tax exemptions for expenses towards a child’s tuition fees and principal repayment of home loans as well as stamp duty and registration costs for buying a property. The deductions availed reduce the taxable income by a considerable amount, helping you avoidheavy tax burden.  

How to avail of tax deductions under section 80C?

To enjoy the benefits of section 80C, you need to know how to avail of the tax deductions correctly. Here’s how to do it for different categories of investment plans. 

• Life Insurance premiums:

  Buy the policy and pay premiums for life insurance plans like the term plan, TROP policies, ULIPs and capital guarantee solutions. For individual policies, exemptions are available for self, spouse or children, while for the HUF, the tax benefit is available to any of the family members. Tax deductions shall be of actual premiums paid in a financial year but it should not be exceeding 10% of the death sum assured  for policies issued after 31 March, 2012 & 20%  for policies issued before that.

• Equity-Linked Savings Scheme (ELSS):

  ELSS is the only mutual fund that offers 80C benefits. Invest yearly in this equity-oriented eligible  funds to earn high returns while saving on taxes. 

• Public Provident Fund (PPF):

  Make contributions to your Public Provident Fund account every year. Do remember, PPF come with a 15-year lock-in period.  

• Employee Provident Fund (EPF):

  Deductions can be claimed for your annual contribution towards the employee provident fund.

• National Savings Certificate (NSC):

  Buy an NSC offered by the postal department of India and invest yearly.

• Post Office Deposit:

  Make a payment towards 5-year deposits at the post office.

• Senior Citizen Scheme: 

  This scheme with a 5-year lock-in period is designed for individuals above 60 years. Those who opt for voluntary retirement can also invest in this scheme at 55 and enjoy the deductions. 

• Home loan:

  The yearly amount paid towards principal repayment for your home loan is eligible for this deduction. 

• Child’s tuition fees:

  Claim deductions for expenses incurred for tuition fees for school, colleges,university or any other educational institution situated within India for full time education for up to two childrenper taxpayer.

It is essential to note that the total deduction available under section 80C considering all the above investment should not exceed Rs.1,50,000 per year. Individuals and HUFs are both eligible for Section 80C deductions. This section also applies to both Indian residents and non-residentIndians.
However, Companies, partnerships, and other corporate bodies are not eligible for the deduction.

What is section 80CCC?

Section 80CCC is a subsection of 80C of the Income Tax Act, 1961, that specifically deals with annuity plans and pension plans. This is the major point of difference between the two if you need clarity regarding sections 80CCC vs 80C. 

Designed to help people maintain a smooth and hassle-free life post-retirement, annuity and pension plans require investments up to retirement and pay out a regular monthly amount afterwards. As a part of section 80C, section 80CCC offers deductions up to Rs 1.5 lakh per year towards these pension plan payments. However, this tax exemption is available only for the plans which are eligible under section 10(23AAB). Moreover, only resident and non-resident Indian taxpayers can claim this deduction and not a HUF. Another crucial point to be noted here is, that taxes are payable from the year of receiving the pension or for money-back due to surrender of policy including accrued bonuses and interest.  

How to avail of tax deductions under section 80CCC?

You can avail tax deductions on your investments up to up to Rs 1.5 lakh per year in specific pension funds offered by life insurance plans.

Can I Claim Deductions Under Both Sections?

As a taxpayer, you can claim deductions under both Section 80C and 80CCC, but the total deduction for both cannot exceed INR 1, 50,000. You can always check your tax calculations with an accountant to ensure you have paid all your taxes and do not attract any fines or defaults.

Educating yourself about the various sections of the Income Tax Act allows you to plan your tax savings. You can leverage the knowledge to make smart investments and optimise your taxes as well.

FAQs about the difference between Section 80C and 80CCC?

Q. Can I claim both 80C and 80CCC?

A. Yes, deductions can be claimed for both 80C and 80CCC together. Under section 80C of the Income Tax Act, 1961 one can claim deductions up to Rs 1.5 lakh a year for premiums paid towards life insurance and other investments. Section 80CCC provides similar tax deductions for payments towards pension and annuity plans eligible under section 10 (23AAB). But if you want to claim tax benefits under both sections, the total deduction available will be Rs 1.5 lakh only.

Q. What is the maximum tax exemption under 80C?

A. Under section 80C of the Income Tax Act, 1961, tax deductions can be claimed for life insurance and other investments. The maximum tax exemption available under this section is for premiums paid up to Rs 1.5 lakh per year. Another crucial point here the deduction can be availed of the actual premiums paid but it will be limited to 10% of the death sum assured  for policies issued after 31 March, 2012. 

Q. Which plan comes under 80CCC?

A. Under 80CCC for the Income Tax Act, 1961, annuity and pension plans are entitled to tax exemptions. For payment towards these plans, the maximum deduction available is Rs 1.5 lakh per year. However, to claim this tax benefit, your pension or annuity plan needs to be eligible under section 10(23AAB). 

Q. Who is eligible for an 80C deduction?

A. Individuals and Hindu Undivided Families (HUF) in India who are income earners and taxpayers are eligible for an 80C deduction under the provisions of the Income Tax Act, 1961. This section allows deductions up to Rs 1.5 lakh per annum for payments towards life insurance and other investment plans.

Q. How much should I invest to save tax?

A. The Income Tax Act, 1961 allows a maximum deduction of Rs 1.5 lakh per annum towards life insurance and other investments under section 80C. So, to claim the maximum possible benefits and save taxes under the provisions of the Income Tax Act, you should invest up to Rs 1.5 lakh a year. 

ARN: INT/ED/12/23/7112