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Difference between Section 80C and 80CCC

The Income Tax Act,1961 of India offers various provisions to encourage individuals to save and invest, providing significant tax benefits in return. Among these, Sections 80C and 80CCC (under old tax regime) stand out as popular choices for taxpayers seeking to reduce their liabilities while securing their financial future. But what exactly sets these sections apart? What’s the real difference between 80C and 80CCC?Read More

While both aim to promote savings and investment, their scope, eligibility, and purpose vary significantly. Let's delve deeper into 80C vs 80CCC to understand how these provisions cater to distinct financial goals and how you can use them to optimize your tax planning.Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 18th Jan 2024
Modified on: 22nd Jan 2024
Reading Time: 15 Mins
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Section 80C: Maximizing Savings with Comprehensive Tax Benefits
 

Section 80C of the Income Tax Act, 1961, enables individual taxpayers and Hindu Undivided Families (HUFs) to reduce their taxable income by up to ₹1.5 lakh annually (under old tax regime) through specified investments and expenditures1. This provision encourages savings and investments among taxpayers.
 

Eligibility:
 

  • Who Can Avail: Individual taxpayers and HUFs are eligible to claim deductions under Section 80C (under old tax regime). Corporate entities, partnership firms, and other businesses are not eligible1.
     

Qualifying Investments and Expenditures1:
 

  • Life Insurance Premiums: Premiums paid for policies covering self, spouse, or children.
  • Employee Provident Fund (EPF): Employees share of Contributions made to EPF accounts.
  • Public Provident Fund (PPF): Deposits into PPF accounts.
  • National Savings Certificate (NSC): Investments in NSCs.
  • Equity-Linked Savings Schemes (ELSS): Investments in specified mutual funds.
  • Principal Repayment of Home Loans: The repayment of the actual principal component of a home loan.
  • Tuition Fees: Payments made towards tuition fees for up to two children to any university, college, school, or other educational institution situated within India3.
  • Fixed Deposits: Investments in tax-saving fixed deposits with a minimum tenure of five years.
  • Sukanya Samriddhi Yojana: Contributions to this scheme for a girl child till 21 years of age.
  • Senior Citizen Savings Scheme: Investments in this scheme are designed for senior citizens.
     

Deduction Limit:
 

  • The cumulative deduction limit under Section 80C (incase of old tax regime) is ₹1.5 lakh per financial year1. This means the total amount claimed across all eligible investments and expenditures cannot exceed this threshold1.

    By strategically investing in these instruments, you can effectively reduce your taxable income while simultaneously building a robust savings portfolio.
     

Section 80CCC: Encouraging Retirement Planning with Tax Benefits
 

Section 80CCC of the Income Tax Act, 1961, is a provision designed to promote financial security during retirement by offering tax deductions on contributions to certain pension plans2. This deduction is available only under old tax regime.
 

Eligibility:
 

  • Who Can Avail: Any individual taxpayer is eligible to claim deductions under Section 80CCC2   (under old tax regime). Unlike Section 80C, this provision does not apply to Hindu Undivided Families (HUFs)2.
  • Purpose: It specifically caters to taxpayers who invest in pension or annuity plans to build a steady income stream for their retirement2.
     

Qualifying Investments:
 

Section 80CCC applies to contributions made (under old tax regime) towards pension funds offered by life insurance companies2. These funds are designed to accumulate wealth during your working years, which is later used to provide regular income or a pension during retirement. Examples of eligible plans include:

  • Pension Plans from Insurers: Contributions to annuity or pension schemes, such as those offered by Bajaj Allianz Life Insurance Company or other approved insurers2.
  • Deferred Annuity Plans: Plans that offer income at a later stage in life, ensuring financial stability during retirement years2.
     

Deduction Limit:
 

  • The maximum deduction limit under Section 80CCC is ₹1.5 lakh per financial year2 (under old tax regime).
  • This limit is includes the deduction limit of Sections 80C and 80CCD(1). In other words, the total deduction across these three sections cannot exceed ₹1.5 lakh in a financial year2(under old tax regime).

By using Section 80CCC effectively, you can not only reduce your tax liabilities but also plan for a financially secure retirement.
 

Understanding the Difference between 80C and 80CCC
 

Now that we’ve explored Section 80C and Section 80CCC, understanding the distinction between the two is crucial for effective tax planning. While both sections provide valuable tax deductions, they focus on different types of investments and financial goals. Let’s dive into the difference between Section 80C and 80CCC to clarify their unique benefits and applications.
 

1. Coverage and Purpose
 

  1. Section 80C: This section is broader in scope, offering deductions on a variety of investments and expenses, such as life insurance premiums, ELSS mutual funds, tuition fees, PPF, and home loan repayments1. It is ideal for taxpayers looking for a wide range of options to save tax1.
  2. Section 80CCC: This section specifically focuses on contributions to pension plans or annuity schemes2. It is tailored for individuals who prioritise retirement planning and wish to secure a steady income post-retirement.
     

2. Eligibility
 

  • 80C: Available to individual taxpayers and Hindu Undivided Families (HUFs)1.
  • 80CCC: Limited to individual taxpayers only. HUFs cannot claim deductions under this section2.
     

3. Tax Deduction Limit
 

  • 80C: The total deduction available under this section is up to ₹1.5 lakh (under old tax regime) per financial year1.
  • 80CCC: The maximum deduction under this section is also ₹1.5 lakh (under old tax regime), but it falls under the combined ceiling of ₹1.5 lakh shared with 80C and 80CCD(1)2.
     

4. Tax Treatment on Returns
 

a. 80C: In some cases, investments under 80C (like PPF4, life insurance plans under certain terms and conditions5, etc.) offer tax-free maturity benefits.

b. 80CCC: While contributions are deductible, the pension or annuity received is taxable under the individual’s applicable income tax slab2.
 

Conclusion
 

Section 80C provides a versatile range of tax-saving instruments, while Section 80CCC is designed for retirement-centric savings through pension plans. Both sections play a vital role in financial planning, but taxpayers must balance their investments to maximise benefits while aligning with their long-term goals. By understanding the difference between 80C and 80CCC, taxpayers can make informed decisions to optimise tax savings and secure their financial future.
 

FAQs
 

1. What is the main difference between Section 80C and 80CCC?
 

Section 80C offers deductions for a wide range of investments like PPF, ELSS, and life insurance premiums, while Section 80CCC is specifically for contributions to annuity plans for securing a pension.
 

2. Can I claim deductions under both 80C and 80CCC?
 

Yes, you can claim deductions under both sections (incase of old tax regime), but the combined limit for deductions under 80C, 80CCC, and 80CCD(1) is capped at ₹1.5 lakh per financial year.
 

3. Are ELSS and pension plans covered under the same section?
 

No, ELSS is covered under Section 80C 1, while pension plans that provide annuities fall under Section 80CCC 2.
 

4. Which section is better for long-term retirement planning?
 

Section 80CCC is tailored for retirement planning as it supports annuity-based pension schemes2, whereas Section 80C supports a broader range of savings and      1.
 

5. Do contributions to ULIPs fall under Section 80C or 80CCC?
 

ULIPs (Unit Linked Insurance Plans) fall under Section 80C (under old tax regime), as they combine investment and insurance benefits.
 

Sources:

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The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility

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*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

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^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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^Subject to Section 10 (10D) conditions i.e. aggregate annual premium for ULIP policies issued on or after 1st February 2021 does not exceed Rs. 2.5 Lakhs.

1Minimum premium mentioned is applicable for Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01) and is subject to policy terms and conditions.

#Source: https://economictimes.indiatimes.com/investments-marts/eight-crucial-numbers-to-ensure-financial-success/10-times-the-annual-income-is-your-life-insurance/slideshow/16699748.cms . Subject to availability in Bajaj Allianz Life ULIP Plans. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

*Benchmark: Nifty 500 Multicap Momentum Quality 50 Index past 5 CAGR Returns, as on 31st December 2024. Past returns of a fund are not necessarily indicative of the future performance of the fund. | Please consult the financial advisor before investing.

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01) are only the name of the unit linked insurance contracts and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com ) carefully before concluding a sale.

Nifty 500 Multicap Momentum Quality 50 Index Fund is available Bajaj Allianz Life Future Wealth Gain IV - A Unit- linked Non- Participating Individual Life Savings Insurance Plan (UIN:116L202V01), Bajaj Allianz Life Goal Assure IV - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L204V01), Bajaj Allianz Life LongLife Goal III is A Unit-linked Non-Participating Whole Life Insurance Plan (UIN:116L203V01), Bajaj Allianz Life Invest Protect Goal III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L205V01), Bajaj Allianz Life Magnum Fortune Plus III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L207V01), Bajaj Allianz Life Goal Based Saving III - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN:116L206V01) and Bajaj Allianz Life Smart Wealth Goal V - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L201V01)

In addition to the already existing funds, Nifty 500 Multicap Momentum Quality 50 Index Fund is now available with the above mentioned products. Customer has an option to choose from other available funds apart from Nifty 500 Multicap Momentum Quality 50 Index Fund.

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any Call made, including via Voice over Internet Protocol & WhatsApp, SMS or WhatsApp messages, in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

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