You have indicated deduction under Sec. 80C in
The reader is right that Sec. 80CCC allows contributions to certain approved annuity plans described in the section as pension plans. These are annuity policies issued by the LIC and other insurers. Any contribution to such policies, excluding bonus and interest, if any, is deductible up to a ceiling of Rs. 1 lakh. There are different policies with different age limits for entry with coverage of risk for life for varying periods as per the terms of the policy. Single premium policies are also available. Some policies have a ceiling on annual payment. Once a person becomes a subscriber, he can continue to contribute till the expiry of the period covered or death, whichever is earlier. The subscription may be paid in more than one instalment. Minimum and maximum age of the entry as well as the age of maturity depends on the options available under the terms of each class of policies. Benefits can be obtained as annuities till the date of death or for fixed period or by way of lump sum on the date of death. The options are many and may be suitable for the young and middle-age group.
An important fact, however, to be borne in mind is that this deduction under Sec. 80CCC is not an outright deduction as under Sec. 80C. Any amount drawn by way of lump sum or as annuities will be taxable on the date on which they are drawn. It follows EET (Exempt, Exempt, Tax) Scheme as under earlier National Savings Scheme, 1987, under Sec. 80CCA and contribution to Equity Linked Savings Scheme promoted by Unit Trust of India and mutual funds under Sec. 80CCB. Both these schemes are discontinued with effect from April 1, 1991. At present, deduction under Sec. 80CCC substitutes them.