Section
80CCD
Deduction in respect of contribution to pension
scheme of Central Government



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.




Example:
Salary
= 20000 Â 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
LICÂ Â Â Â Â Â Â Â Â Â Â Â Â = 30000/-
PPF Â Â Â Â Â Â Â Â Â Â Â Â = 44000/-
Employees
Share CPFÂ Â Â Â Â =Â Â Â Â Â Â 36000 (80CCD)
Total
                            =      110000/-
(Maximum
Allowable) Â Â Â Â = Â Â Â Â Â 100000/-
Less:
Employer contribution to CPF
Deduction
u/s 80CCD(2)Â Â Â Â Â Â Â Â Â = Â Â Â Â Â 36000/-
Total
Deduction             =      136000/-
Net
Taxable income is    =
516000-136000=380000/-Â Â
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