Section 80CCH of the Income Tax Act was introduced to provide a special tax benefit for soldiers enrolled under the Agnipath Scheme (Agniveers). The government introduced Section 80CCH as a new tax provision specifically designed to support participants of the Agnipath Scheme. This section ensures that Agniveers enjoy complete tax exemption on their Seva Nidhi contributions and maturity proceeds throughout their 4-year service period.
- Announcement Date: 1 February 2023 (during the Budget speech by Finance Minister Nirmala Sitharaman).
- Effective From: Assessment Year 2024-25 (FY 2023-24 onwards).
- Purpose: To exempt Agniveer Corpus Fund (Seva Nidhi) contributions and withdrawals from income tax.
Tax Benefits
- Full Deduction on Contributions: You can claim a tax deduction for the total amount contributed by both you and the Central Government to the Agniveer Corpus Fund in the previous financial year.
- No Cap on Deduction: There is no upper limit on the deductible amount.
- Tax-Free Corpus Payout: The lump sum received from the Agniveer Corpus Fund upon completing the four-year service period is entirely tax-exempt.
- Applicable Under Both Tax Regimes: This deduction is available under both the old and new tax regimes. However, under the new regime, only the Central Government’s contribution qualifies for deduction—your personal contributions are not deductible.
The purpose of Section 80CCH is to provide complete tax exemption on all earnings under the Agnipath Scheme, encouraging more individuals to join the initiative.
| As per the Income Tax Act of 1961, Section 80CCH states that- “(1) Where an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after the 1st day of November, 2022, has in the previous year paid or deposited any amount in his account in the said Fund, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited. (2) Where the Central Government makes any contribution to the account of an assessee in the Agniveer Corpus Fund referred to in sub-section (1), the assessee shall be allowed a deduction in the computation of his total income of the whole of the amount so contributed. Explanation.—For the purposes of this section,— (a) “Agnipath Scheme” means the scheme for enrolment in Indian Armed Forces introduced vide letter No. 1(23)2022/D(Pay/Services), dated the 29th December, 2022 of the Government of India in the Ministry of Defence; (b) “Agniveer Corpus Fund” means a fund in which consolidated contributions of all the Agniveers and matching contributions of the Central Government along with interest on both these contributions are held.] |
Update for AY 2025-26 (FY 2024-25)
For the current assessment year, the Income Tax Return (ITR) forms (ITR-1 and ITR-4) have been revised to include a dedicated field for claiming deductions under Section 80CCH. This allows eligible individuals to declare the deductible amount seamlessly.
FAQs
There is no upper limit—the full amount contributed (by both the Agniveer and the government) in a financial year is deductible.
No, the final corpus payout after completing the 4-year service period is fully exempt from tax.
Yes, but with a key difference:
Old Tax Regime: Deduction available for both your contributions and the government’s.
New Tax Regime: Only the Central Government’s contribution qualifies for deduction; your own contributions are not deductible.
Yes, Section 80CCH is independent of other deductions (e.g., 80C, 80D). Contributions to the Agniveer Fund do not affect limits under other sections.
Tax benefits apply only upon completion of service. Early exit may lead to loss of exemptions.