Contribution to certain pension funds are covered in this section
This contribution may be made by an Individual
The individual may be
Employed (i.e. in job)
or
Self employed (i.e. in business)
Deduction is as follows
In case of job (Individual is employed)
Both employee and employer contribute towards this scheme
Max deduction is
10% of Basic + DA for employee (Section 80CCD (1) )
and
10% of Basic + DA for employer (Section 80CCD (3) )
In case of person not in job (example- self-employed)
Only he contributes as there is no employer
Max deduction is
10% of Gross Total income (GTI) (80CCD(1)
Note:-
- Overall limit of 80C+80CCC+ 80CCD (1) cant be more than Rs 150000.(Note:-Maximum limit of 150000 applies to employees contribution and not employers contribution)
- If deduction claim under 80C regarding annuity plan then deduction cannot be claimed again under this section.
New Amendment
Subsection 80CCD (1B)
Maximum deduction of Rs 50000 under this section for contribuition to NPS
This is in addition to above mentioned limits of 10% or overall limit of Rs 1500000
Hence,it is always beneficial for assessee to first claim Rs 50000 deduction under Section 80CCD (1B) and balance under Section 80CCD (1)
Summary
Taxable on Withdrawal
Amount received from pension find shall be taxable in the year received.
This amount may be in the form of
- Pension
- Lump sum amount on surrender of pension fund.
However if amount withdrawn for purchasing annuity plan, then not taxable
