Section 80CCH: Deduction for Agniveer

India’s young population is poised to play a pivotal role in achieving the vision of creating an Aatma Nirbhar, Sashakt Bharat. The Agnipath scheme is designed to bring them closer to this goal. It presents a distinctive opportunity to fulfil their aspirations of joining the Armed Forces and contributing to the service of the nation. Under the Income Tax Act, the deduction of Section 80CCH is one of the benefits provided under the Agnipath Scheme.

Agnipath Scheme

The Agnipath scheme, initiated by the Indian Government on June 14th, 2020, aims to enlist individuals into the armed forces. Eligibility for application is open to individuals aged between 17.5 and 21 years. This innovative scheme adopts a tour-of-duty style approach, commissioning individuals as soldiers across the three branches of the armed forces. After a service tenure of 4 years, 25% of participants, known as “Agniveers,” will have the opportunity to transition to a regular armed forces cadre.

The benefit of Section 80CCH is also available under the New Tax Regime.

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The benefit of Section 80CCH is also available under the New Tax Regime.

Agniveer Corpus Fund

Participants in the Agnipath scheme are entitled to receive SevaNidhi. It is a stipulated sum granted upon completing their 4-year employment period. To qualify, individuals are required to allocate 30% of their monthly earnings to the Agniveer corpus fund. Additionally, the central government will match this contribution, augmenting the candidates’ accounts. The Agniveer Corpus Fund means contributions by individual and Central government along with the interest on both these contributions.

Deduction under Section 80CCH

The Income Tax have various deductions. Under Section 80CCH of the Income Tax Act, the entire amount contributed by applicants and the Central Government to the Agniveer Corpus Fund is applicable for tax deductions. An individual enrolled in the Agnipath Scheme and contributing to the Agniveer Corpus Fund on or after the 1st day of November 2022, and who has made deposits into the fund during the preceding year are eligible for a deduction.

All these above amendments have come into effect from April 1st 2023. Furthermore, they will remain valid in the coming assessment years.

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