Section 80CCD

Section
80CCD
Deduction in respect of contribution to pension
scheme of Central Government
*     
An individual assessee employed by the Central
Government or any other employer on or after 01.01.2004.
*     
Any other assessee individual has paid or deposited
any amount in a notified pension scheme.
*     
He shall be allowed a deduction of such amount paid
as does not exceed-
ü      In the case of
an employee, 10% of his salary in the previous year end
ü      In any other
case, 10% of his gross total income in the previous year.
*     
In case of Central Government or any other employer
makes a contribution to employees account as does not exceeding 10% of the
salary and subject to section 80CCE for further deduction of such an amount.
*     
If assessee nominee, receives and amount from said
Pension Scheme and deduction than the whole of such amount shall be deemed to
be the income of the assessee or his nominee in the year of receipt.
*     
Any amount paid or deposited by the assessee has been
allowed as a deduction under said section would not be considered for further
benefit u/s 80C.
*     
If amount used for purchasing an annuity plan in the
same previous year then the assessee shall be deemed not to have received any
amount.

Example:
Salary
= 20000  DA = 10000 Other Taxable
Allowances = 10000
Total
Monthly = 40000 (Yearly 480000)
Employer
contribution to NPS (CPF)=10% of 3000=3000=Yearly=36000/-
Employer
contribution to NPS (CPF)=10% of 3000=3000=Yearly=36000/-
Employee
invested 3000 in insurance policy eligible u/s 80C
PPF
= 44000
Computation
of Income
Income
from Salary                                      = 480000/-
Add:
Employer’s contribution to CPF/NPS     =
36000/-
Gross
Taxable Salary/Income                       =
516000/-
Less:
Deduction u/s 80C
LIC              = 30000/-
PPF              = 44000/-
Employees
Share CPF      =       36000 (80CCD)
Total
                             =       110000/-
(Maximum
Allowable)      =       100000/-
Less:
Employer contribution to CPF
Deduction
u/s 80CCD(2)          =       36000/-
Total
Deduction               =       136000/-

Net
Taxable income is     =
516000-136000=380000/-  
RECOMMENDED READ  DVAT Form 38 & 38A

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