The premium paid to buy the plan is allowed as a deduction under Section 80CCC up to INR 1.5 lakhs. If you withdraw the policy and avail a surrender value, the surrender value would be taxable in your hands. Similarly, the amount of pension or annuity paid by the policy after retirement would also be considered as a taxable income in your hands and taxed at your slab rates. However, if you buy a deferred pension plan and commute 1/3rd part of the corpus on the maturity of the policy, the commuted amount of pension would be allowed as a tax-free income under Section 10 (10A) of the Income Tax Act, 1961.