Key Takeaways
- Section 80CCC allows an individual to deduct amounts paid to keep in force an annuity (pension) plan of LIC or any other insurer, where the plan provides a pension at maturity.
- The deduction limit is Rs 1,50,000, but it is not a standalone limit. Section 80CCC is subsumed within the combined Rs 1,50,000 ceiling of Section 80CCE, shared with 80C and 80CCD(1).
- Only an individual can claim 80CCC. A HUF cannot claim this deduction.
- The pension you receive later, and any surrender value or bonus, is taxable in the year of receipt under Section 80CCC(2), if a deduction was earlier allowed on the contribution.
- Section 80CCC is a Chapter VI-A deduction. It is not available under the new tax regime (Section 115BAC), which is the default regime from FY 2023-24. You can claim 80CCC only if you opt for the old regime.
- Common qualifying plans include LIC Jeevan Nidhi, LIC Jeevan Dhara, UTI Retirement Benefit Pension Fund, and SBI Life Saral Pension (and similar approved annuity plans of insurers).
- Under the Income Tax Act 2025, the 80CCC benefit maps to a corresponding deduction provision; the substance of the relief continues unchanged.
What is Section 80CCC? Section 80CCC of the Income Tax Act 1961 allows an individual to claim a deduction of up to Rs 1,50,000 for amounts paid to keep in force an annuity (pension) plan of LIC or any other insurer that provides a pension. The deduction is shared within the overall Rs 1,50,000 limit of Section 80CCE.
If you have bought a pension or annuity plan from an insurer to fund your retirement, the premium you pay may qualify for a tax deduction under Section 80CCC. This is one of the lesser understood provisions in Chapter VI-A, because it lives in the shadow of the far more popular Section 80C and is often confused with the NPS deduction under Section 80CCD.
The confusion matters in two ways. First, taxpayers frequently believe 80CCC gives them an extra Rs 1.5 lakh of deduction over and above 80C. It does not. Second, many forget that the pension received later is fully taxable, which changes the long-term arithmetic of these plans.
This guide explains exactly what Section 80CCC covers, who can claim it, how the shared Rs 1,50,000 ceiling under Section 80CCE works, how it differs from 80C and 80CCD, why it is unavailable under the default new regime, and what is taxable when the pension finally starts.
Looking for expert help with Section 80CCC deduction pension fund annuity plan contribution income tax India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
What Is Section 80CCC?
Section 80CCC provides a deduction to an individual who, in the previous year, has paid or deposited any amount out of income chargeable to tax to keep in force a contract for an annuity plan of the Life Insurance Corporation of India (LIC) or any other insurer for receiving a pension from a fund referred to in Section 10(23AAB).
In plain terms: if you pay a premium into an approved pension or annuity plan that is designed to pay you a pension on maturity, that premium qualifies for deduction under Section 80CCC, subject to the limits below.
Three elements must be satisfied:
- The taxpayer is an individual (resident or non-resident). A HUF, firm, or company cannot claim this deduction.
- The payment is made out of income chargeable to tax for the relevant year.
- The amount is paid to keep in force an annuity plan of an insurer that pays a pension, the fund being one approved under Section 10(23AAB).
The deduction is allowed for the financial year in which the premium is actually paid, on a payment basis.
Which Pension Plans Qualify Under Section 80CCC?
Section 80CCC covers annuity and pension plans of LIC and other approved insurers. The fund must be one referred to in Section 10(23AAB), broadly a pension fund set up by an insurer and approved by the relevant authority.
Plans commonly claimed under Section 80CCC include:
- LIC Jeevan Nidhi (a deferred annuity pension plan)
- LIC Jeevan Dhara / Jeevan Akshay style annuity plans
- UTI Retirement Benefit Pension Fund
- SBI Life Saral Pension and similar SBI Life annuity plans
- Pension or annuity plans of other IRDAI-registered insurers that provide a pension and are linked to a Section 10(23AAB) fund
Read the policy document, not the brochure. Not every "retirement" or "savings" plan sold by an insurer qualifies under Section 80CCC. The plan must be a pension or annuity plan linked to a fund under Section 10(23AAB). A pure endowment or money-back policy is usually claimed under Section 80C (life insurance premium), not 80CCC. When in doubt, check the section number printed on the premium receipt or the policy document.
How Much Can You Deduct Under Section 80CCC?
The deduction under Section 80CCC is the amount actually paid in the year, capped at Rs 1,50,000.
But this Rs 1,50,000 is not an independent allowance. Section 80CCC operates inside the combined ceiling created by Section 80CCE, discussed in detail below. In effect, the practical limit you can claim under 80CCC is whatever portion of the Rs 1,50,000 combined cap remains after your 80C and 80CCD(1) claims.
Tax Rate Chart
Section 80CCC: Deduction at a Glance
Limits and treatment for AY 2026-27 (old regime)
Maximum 80CCC deduction
Capped at Rs 1,50,000 paid in the year; shared with 80C + 80CCD(1)
Combined 80CCE ceiling
80C + 80CCC + 80CCD(1) together cannot exceed Rs 1,50,000
Eligible taxpayer
Only individuals; HUF cannot claim 80CCC
Availability under new regime
Not allowed under Section 115BAC (default regime); old regime only
Source: Sections 80CCC, 80CCE, 115BAC, Income Tax Act 1961
The Combined Rs 1,50,000 Ceiling Under Section 80CCE
This is the single most important and most misunderstood point about Section 80CCC.
Section 80CCE provides that the aggregate of deductions under:
- Section 80C (life insurance premium, PPF, ELSS, principal repayment of home loan, tuition fees, EPF, NSC, tax-saving FD, etc.),
- Section 80CCC (pension fund contributions), and
- Section 80CCD(1) (employee or self contribution to NPS),
shall not exceed Rs 1,50,000 in a financial year.
So 80CCC does not add to your tax-saving capacity beyond Rs 1,50,000. If you have already exhausted Rs 1,50,000 through PPF, ELSS, and EPF under 80C, your 80CCC pension premium gives you no further deduction. It simply substitutes for, rather than stacks on top of, the 80C limit.
| Provision | What it covers | Standalone limit | Counts toward 80CCE Rs 1.5L cap? |
|---|---|---|---|
| Section 80C | Life insurance, PPF, ELSS, EPF, NSC, home loan principal, tuition fees | Rs 1,50,000 | Yes |
| Section 80CCC | Premium for annuity/pension plans of insurers | Rs 1,50,000 | Yes |
| Section 80CCD(1) | Employee or self contribution to NPS | 10% of salary / 20% of GTI | Yes |
| Section 80CCD(1B) | Additional NPS contribution | Rs 50,000 | No (over and above 80CCE) |
| Section 80CCD(2) | Employer contribution to NPS | 14% / 10% of salary | No (separate limit) |
The one exception worth knowing. Section 80CCD(1B) allows an additional Rs 50,000 NPS deduction that sits outside the Section 80CCE Rs 1,50,000 cap. There is no equivalent top-up for 80CCC. This is one reason a salaried taxpayer choosing between a pension annuity (80CCC) and NPS (80CCD) may find NPS offers more headroom, because of the extra Rs 50,000 lane.
Worked Example: How the Ceiling Bites
Consider Ramesh, a salaried individual on the old regime for FY 2025-26 (AY 2026-27):
| Investment / payment | Section | Amount paid |
|---|---|---|
| EPF deducted from salary | 80C | Rs 60,000 |
| PPF contribution | 80C | Rs 50,000 |
| LIC Jeevan Nidhi pension premium | 80CCC | Rs 80,000 |
| Total paid across 80C + 80CCC | Rs 1,90,000 | |
| Deduction actually allowed (80CCE cap) | Rs 1,50,000 |
Even though Ramesh paid Rs 1,90,000 across qualifying instruments, his combined deduction is capped at Rs 1,50,000. The Rs 40,000 excess gives him no tax benefit in the old regime. Had he routed part of this into NPS, the Rs 50,000 under 80CCD(1B) would have been available over and above the cap.
Section 80CCC vs 80CCD(1) vs 80C: Key Distinctions
These three provisions share the Rs 1,50,000 ceiling but differ in scope, eligibility, and downstream taxation.
Comparison
Section 80CCC vs 80CCD(1)
Pension annuity plans versus NPS contributions
| Parameter | Section 80CCC | Section 80CCD(1) |
|---|---|---|
| Instrument | Annuity / pension plan of an insurer (LIC, SBI Life, etc.) | National Pension System (NPS) Tier I account |
| Who can claim | Individual only (resident or NRI) | Individual (salaried or self-employed) |
| HUF eligible | No | No |
| Standalone limit | Rs 1,50,000 | 10% of salary (salaried) / 20% of GTI (self-employed) |
| Within 80CCE Rs 1.5L cap | Yes | Yes |
| Extra Rs 50,000 lane (80CCD(1B)) | Not available | Available (over and above 80CCE) |
| Pension on maturity | Taxable when received | Annuity portion taxable when received |
| Available under new regime | No | No (only 80CCD(2) employer share survives) |
Source: Sections 80CCC, 80CCD, 80CCE, Income Tax Act 1961
The relationship with Section 80C is simpler: 80C covers a broad basket of savings and insurance instruments, while 80CCC is narrowly restricted to annuity/pension plans. Both feed into the same Rs 1,50,000 pool. For the full 80C basket, see the Section 80C deduction guide for AY 2026-27. For the NPS treatment, see the NPS tax benefits guide.
Taxation of the Pension and Surrender Value
Section 80CCC is a deferral, not an exemption. The deduction you take today is recovered by the tax department when the money comes back to you.
Under Section 80CCC(2), the following amounts are taxable in the year of receipt as income, if a deduction was earlier allowed on the contribution:
- The pension / annuity received from the plan
- Any amount received on surrender of the annuity, in whole or in part
- Any bonus or interest accrued on the policy
This income is chargeable to tax in the hands of the assessee (or the nominee, where applicable) in the previous year in which the pension or surrender amount is received. It is taxed at the applicable slab rate.
The deferral trap. If you claimed an 80CCC deduction during your working years (when you were likely in a higher slab), the pension is taxed later (possibly at a lower slab, but possibly not). Crucially, the entire pension and the entire surrender value are taxable if a deduction was claimed. There is no maturity exemption comparable to the Section 10(10D) relief that some life insurance policies enjoy. Plan the long-term tax outcome, not just this year's deduction.
What If No Deduction Was Claimed?
If you never claimed a deduction under 80CCC on the contributions (for example, because you were on the new regime, or had already exhausted the 80CCE cap through other instruments), then Section 80CCC(2) is generally not triggered for that contribution. The annuity treatment then follows the ordinary rules for the receipt. Keep documentary evidence of the years in which no deduction was taken, because the taxability of the eventual payout depends on whether a deduction was ever allowed.
Old Regime vs New Regime: Where 80CCC Stands
This is decisive. Section 80CCC is a Chapter VI-A deduction, and Chapter VI-A deductions are not available under the new tax regime under Section 115BAC.
Since FY 2023-24, the new regime is the default. If you do nothing, you are taxed under the new regime, and you cannot claim 80CCC (nor 80C, nor 80CCD(1), nor most other Chapter VI-A deductions). The new regime offers lower slab rates in exchange for forgoing these deductions.
To claim 80CCC, you must opt out of the new regime and into the old regime:
- Salaried individuals (no business income): can choose the old regime each year directly in the ITR.
- Individuals with business or professional income: must file Form 10-IEA to opt for the old regime, and the switching flexibility is restricted.
Comparison
Section 80CCC: Old Regime vs New Regime
Where the pension deduction is available for AY 2026-27
| Parameter | Old Regime | New Regime (default) |
|---|---|---|
| Section 80CCC deduction | Available (up to 80CCE cap) | Not available |
| Section 80C / 80CCD(1) | Available | Not available |
| Section 80CCD(1B) extra Rs 50,000 | Available | Not available |
| Slab rates | Higher slabs | Lower slabs |
| Default for FY 2023-24 onwards | Must opt in | Yes (automatic) |
| How to choose | ITR (salaried) or Form 10-IEA (business) | No action needed |
Source: Sections 80CCC, 80CCE, 115BAC, Income Tax Act 1961
The practical decision is a comparison: does the tax saved by claiming 80CCC (and your other old-regime deductions) exceed the benefit of the lower new-regime slab rates? For taxpayers with modest deductions, the new regime often wins, in which case the 80CCC pension premium delivers no tax benefit at all. For an apples-to-apples comparison, see the old vs new tax regime guide for AY 2026-27 and the income tax slab rates for FY 2026-27.
Do not buy a pension plan only for the 80CCC deduction without checking your regime. If you are on the default new regime, the premium gives you zero deduction. Many taxpayers buy an annuity plan in March expecting a tax break and then discover at filing that they are better off on the new regime, where the deduction is lost. Decide the regime first, then the investment.
How to Claim Section 80CCC in Your ITR
For AY 2026-27 (income of FY 2025-26):
-
Confirm you are on the old regime. If you are on the new regime, 80CCC cannot be claimed. Salaried taxpayers select the old regime within the ITR; those with business income file Form 10-IEA.
-
Collect the premium receipt. The receipt from the insurer (LIC, SBI Life, UTI, etc.) must show the amount paid in FY 2025-26 toward the annuity/pension plan, and ideally reference Section 80CCC.
-
Enter the amount under the Chapter VI-A schedule. In the ITR, 80CCC appears within the Section 80C/80CCC/80CCD deduction block. Enter the premium paid.
-
Watch the combined cap. The utility will restrict the aggregate of 80C + 80CCC + 80CCD(1) to Rs 1,50,000. Confirm the allowed figure matches your expectation.
-
Pick the right ITR form. Most salaried individuals claiming 80CCC use ITR-1 or ITR-2 depending on their other income. Those with business income use ITR-3.
-
Retain proof. Keep premium receipts and the policy document for at least the period the return can be reviewed, in case the deduction is queried.
Common Section 80CCC Mistakes
-
Treating 80CCC as an extra Rs 1.5 lakh over 80C. It is not. The combined 80CCE ceiling caps 80C + 80CCC + 80CCD(1) at Rs 1,50,000 together.
-
Claiming 80CCC under the new regime. Chapter VI-A deductions, including 80CCC, are unavailable under the default new regime. The claim will be disallowed.
-
A HUF claiming the deduction. Only individuals qualify. A HUF cannot claim 80CCC.
-
Forgetting the pension is taxable later. The annuity received and any surrender value are taxable in the year of receipt under Section 80CCC(2) if a deduction was claimed. There is no maturity exemption.
-
Claiming a non-qualifying plan. A pure endowment or money-back life policy is generally an 80C claim, not 80CCC. Only annuity/pension plans linked to a Section 10(23AAB) fund qualify.
-
Claiming on a payment not made from taxable income. The premium must be paid out of income chargeable to tax for the year.
What Changes Under the Income Tax Act 2025
The Income Tax Act 2025 restructures and renumbers the deduction provisions of the 1961 Act. Under the new Act:
- The substance of the Section 80CCC relief (deduction for pension/annuity plan premiums for individuals) is carried forward through a corresponding deduction provision, consolidated with the other Chapter VI-A style deductions.
- The combined ceiling that today sits in Section 80CCE (the shared Rs 1,50,000 cap across 80C, 80CCC, and 80CCD(1)) continues in concept under the new Act.
- The taxability of the pension and surrender value on receipt continues to mirror the existing Section 80CCC(2) treatment.
- The regime architecture (the default lower-rate regime that forgoes these deductions) carries over.
For AY 2026-27 returns (covering FY 2025-26 income, filed in 2026), continue to use the existing Section 80CCC, 80CCE, and 115BAC references. The renumbered provisions of the Income Tax Act 2025 apply from the tax year on which that Act takes effect. We have intentionally not asserted a specific new clause number here, because the final mapping should be confirmed against the notified provisions when you file under the new Act.
Tax Garden Can Help
Deciding whether a pension annuity premium actually saves you tax is not a one-line answer. It depends on your regime choice, how much of the Rs 1,50,000 80CCE ceiling is already used by your EPF, PPF, ELSS, and NPS, and the long-term taxability of the pension you will eventually draw. Tax Garden's tax compliance services model your full Chapter VI-A position, run the old vs new regime comparison on your actual numbers, confirm the 80CCC plan qualifies, and file your ITR with the correct regime election. For Hyderabad and Kondapur taxpayers planning retirement contributions, we make sure the deduction you expect is the deduction you actually get.
Looking for expert help with Section 80CCC pension annuity deduction ITR filing old regime Tax Garden? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
Frequently Asked Questions
What is Section 80CCC of the Income Tax Act?
Section 80CCC allows an individual to claim a deduction of up to Rs 1,50,000 for amounts paid in the year to keep in force an annuity or pension plan of LIC or any other insurer that provides a pension on maturity. The deduction is allowed on a payment basis and is shared within the combined Rs 1,50,000 ceiling of Section 80CCE.
Is the Rs 1.5 lakh under Section 80CCC over and above Section 80C?
No. Section 80CCE caps the aggregate of deductions under 80C, 80CCC, and 80CCD(1) at Rs 1,50,000 in total. So 80CCC does not give an extra Rs 1.5 lakh. If your 80C investments already reach Rs 1,50,000, an 80CCC pension premium gives no additional deduction.
Can I claim Section 80CCC under the new tax regime?
No. Section 80CCC is a Chapter VI-A deduction, and these are not available under the new tax regime under Section 115BAC, which is the default regime from FY 2023-24. You can claim 80CCC only if you opt for the old regime, by selecting it in your ITR (salaried) or filing Form 10-IEA (business income).
Is the pension I receive from an 80CCC plan taxable?
Yes. Under Section 80CCC(2), the pension or annuity received, and any surrender value or bonus, is taxable in the year of receipt as income, taxed at your slab rate, if a deduction was earlier allowed on the contribution. There is no maturity exemption comparable to Section 10(10D) for these plans.
Which pension plans qualify under Section 80CCC?
Annuity or pension plans of LIC and other approved insurers linked to a fund under Section 10(23AAB), such as LIC Jeevan Nidhi, LIC Jeevan Dhara, UTI Retirement Benefit Pension Fund, and SBI Life Saral Pension. A pure endowment or money-back life policy is usually claimed under Section 80C, not 80CCC. Check the policy document.
Can a HUF claim a deduction under Section 80CCC?
No. Only an individual (resident or non-resident) can claim the Section 80CCC deduction. A Hindu Undivided Family (HUF), firm, or company is not eligible. This is a key difference from Section 80C, parts of which a HUF can claim.
What is the difference between Section 80CCC and 80CCD(1) for NPS?
Section 80CCC covers premiums to annuity or pension plans of insurers; Section 80CCD(1) covers contributions to the National Pension System (NPS). Both feed the same Rs 1,50,000 80CCE ceiling. The key advantage of NPS is Section 80CCD(1B), which gives an additional Rs 50,000 deduction outside the 80CCE cap. There is no equivalent top-up for 80CCC.
I am on the new regime. Should I still buy a pension plan for the 80CCC deduction?
Buying a pension plan only for the 80CCC tax break makes no sense if you are on the default new regime, because the deduction is unavailable there and gives zero benefit. Decide your regime first using an old vs new comparison on your actual income, then decide the investment. If the old regime wins for you, 80CCC can help; if not, evaluate the plan purely on its investment merit.
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Sources
This guide is verified against incometax.gov.in/iec/foportal/ (Income Tax Department provisions on deductions under Chapter VI-A), Section 80CCC of the Income Tax Act 1961 (deduction for contributions to certain pension funds; taxability of pension and surrender value under sub-section (2)), Section 80CCE of the Income Tax Act 1961 (combined Rs 1,50,000 ceiling across Sections 80C, 80CCC, and 80CCD(1)), Section 80CCD of the Income Tax Act 1961 (NPS deductions, including the additional Rs 50,000 under 80CCD(1B)), Section 10(23AAB) (approved pension funds of insurers), Section 115BAC of the Income Tax Act 1961 (new tax regime as the default from FY 2023-24 and the consequent unavailability of Chapter VI-A deductions), the Income Tax Act 2025 (renumbering and consolidation of the corresponding deduction provisions), and confirmatory coverage from ClearTax (Section 80CCC deduction explained) and Tax2Win (80CCC pension plan deduction guide). All limits and treatment reflect the provisions applicable for FY 2025-26 (AY 2026-27).