Deduction in respect of contribution to certain pension funds
(1) Where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee's account, if any) as does not exceed the amount of one hundred and fifty thousand rupees in the previous year.
(2) Where any amount standing to the credit of the assessee in a fund, referred to in sub-section (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessee's account, if any, is received by the assessee or his nominee—
(a) on account of the surrender of the annuity plan whether in whole or in part, in any previous year, or
(b) as pension received from the annuity plan,
an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year.
(3) Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section,—
(a) a rebate with reference to such amount shall not be allowed under section 88 for any assessment year ending before the 1st day of April, 2006;
(b) a deduction with reference to such amount shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.
Life Insurance Plans Covered Under Section 80CCC :-
1) Jeevan Nidhi :-
LIC’s New Jeevan Nidhi Plan is a conventional with profits pension plan with a combination of protection and saving features. This plan provides for death cover during the deferment period and offers annuity on survival to the date of vesting.
1.Benefits:
Benefit on Vesting: Provided the policy is in full force, on vesting an amount equal to the Basic Sum Assured along with accrued Guaranteed Additions, vested Simple Reversionary bonuses and Final Additional bonus, if any, shall be made available to the Life Assured.
The following options shall be available to the Life Assured for utilization of the benefit amount.
a) To purchase an immediate annuity
The Life Assured shall have a choice to commute the amount available on vesting to the extent allowed under Income Tax Act. The entire amount available on vesting or the balance amount after commutation, as the case may be, shall be utilized to purchase immediate annuity at the then prevailing annuity rates. Commutation shall only be allowed provided the balance amount is sufficient to purchase a minimum amount of annuity as per the provisions of section 4 of Insurance Act, 1938.
In case the total benefit amount is insufficient to purchase the minimum amount of annuity, then the said amount shall be paid as a lump sum to the Life assured.
The annuity shall only be purchased from Life Insurance Corporation of India.
or
b) To purchase a new Single Premium deferred pension product from Life Insurance Corporation of India
Under this option the entire proceeds available on vesting shall be utilized to purchase a single premium deferred pension product provided the policyholder satisfies the eligibility criteria for purchasing single premium deferred pension product.
The Life Assured will have to intimate his / her intention to go for a particular option available on the date of vesting atleast six months prior to the date of vesting.
» Death Benefit:
Death during first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued Guaranteed Addition shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.
Death after first five policy years: Provided the policy is in full force, Basic Sum Assured along with accrued Guaranteed Addition, Simple Reversionary and Final Additional Bonus, if any, shall be paid as lump sum or in the form of an annuity or partly in lump sum and balance in the form of an annuity to the nominee.
In any case, provided all due premiums have been paid, the total death benefit at any time shall not be less than 105% of the total premiums paid (excluding taxes, extra premium and rider premium, if any).
The amount of annuity will depend on the payable lump sum and the then prevailing immediate annuity rates.
» Guaranteed Additions: The policy provides for Guaranteed Additions @ Rs.50/- per thousand Basic Sum Assured for each completed year, for the first five years.
» Participation in profits: Provided the policy is in full force, depending upon the Corporation’s experience the policies shall participate in profits from 6th year onwards for a Simple Reversionary Bonus at such rate and on such terms as may be declared by the Corporation.
Final (Additional) Bonus may also be declared under the policy in the year when the policy results into a claim either by way of death or on vesting, provided the policy has run for certain minimum term.
2.Optional Benefit:
LIC’s Accidental Death and Disability Benefit Rider: LIC’s Accidental Death and Disability Benefit Rider is available as an optional rider by payment of additional premium under regular premium policies. In case of accidental death, the Accident Benefit Sum Assured will be payable as lumpsum along with the death benefit under the basic plan. In case of accidental disability arising due to accident (within 180 days from the date of accident), an amount equal to the Accident Benefit Sum Assured will be paid in equal monthly instalments spread over 10 years and future premiums for Accident Benefit Sum Assured as well as premiums for the portion of Basic Sum Assured which is equal to Accident Benefit Sum Assured under the policy, shall be waived. If the policy becomes a claim either by way of death or the policy vests before the expiry of the said period of 10 years, the disability benefit instalments which have not fallen due will be paid in lump sum.
The Accident Benefit Sum Assured may be opted for an amount upto the Basic Sum Assured subject to minimum of Rs. 1,00,000 and maximum of Rs. 50 lakh (under individual as well as group policies with LIC of India). This benefit will be available only till the vesting age.
New Jeevan Suraksha: These are Deferred Annuity plans that allow the policyholder to make provision for regular income after the selected term.
Premiums:
Premiums are payable yearly, half-yearly, quarterly, monthly or through Salary deduction, as opted by you, throughout the term of the policy or till earlier death. Alternatively, the premium may be paid in one lump sum (single premium).
Tax Benefits:
Tax relief under Section 80ccc is available on premiums paid under New Jeevan Suraksha I (Table No.147). The premiums paid under New Jeevan Dhara I (Table No.148) qualify for tax relief under Section 88.
Bonuses:
These are with-profit plans and participate in the profits of the Corporation’s annuity / pension business. Policies get a share of the profits in the form of bonuses. Simple Reversionary Bonuses are declared per thousand Sum Assured annually at the end of each financial year. Once declared, they form part of the guaranteed benefits of the plan. Final (Additional) Bonuses may also be payable provided policy has run for a certain minimum period.
