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National Pension Scheme – Section 80CCD

Eligible Assessee – Individual

Eligible Deduction – Amount deposited in the financial year in his account under a pension scheme notified or as may be notified by the Central Government is allowed as deduction from the total taxable income.

Eligible Amount – The amount so deposited will be allowed as a deduction subject to the maximum limit of –

  1. In the case of an employee, ten per cent of his salary in the previous year; (Salary includes Dearness Allowance but excludes all other Allowances and Perquisites)
  2.  and in any other case, ten per cent of his gross total income in the previous year

Additional Deduction

An additional deduction of upto Rs. 50,000 is allowed from financial year 2015-16 for the amount contributed towards National Pension Scheme. This additional deduction is over and above the limit of Rs. 1,50,000 deduction towards 80C, 80CCC, 80CCD(1). Also this deduction is over and above the limit of 10% as mentioned in previous point.

Deduction also allowed for

Any employer makes any contribution to  such notified scheme on behalf of employee , the employee shall be allowed a deduction of the whole of the amount contributed by the employer as does not exceed ten per cent of his salary in the financial year.

Amount withdrawn from such acccount

Where any amount standing to the credit of the assessee (in respect of which a deduction has been allowed) along with interest is received by the assessee or his nominee, in whole or in part, in any year,—

(a)  on account of closure or his opting out of the pension scheme

(b)  as pension received from the annuity plan purchased or taken on such closure or opting out,

the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in the  year in which such amount is received.

The assessee shall be deemed not to have received any amount if such amount is used for purchasing an annuity plan in the same financial year.

Other points

When deduction is allowed under this section then no deduction is allowed under section 88 or section 80C.

About Rohit Pithisaria

Rohit Pithisaria founded TaxAdda in July 2012. He is Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He is actively writing from very beginning of his professional career and is author of various tax articles and blogs.
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