Deduction in respect of contribution to pension scheme of Central Government- Section 80CCD - Income Tax - Ready Reckoner - Income Tax

Deduction in respect of contribution to pension scheme of Central Government- Section 80CCD Section 80CCD(1) : Contribution to pension scheme of CG Contribution by an employee or any other individual towards National Pension Scheme (NPS) and Atal Pension Yojana (APY) is deductible in the year in which contribution is made. Limit up to 10% of the salary of the employee Limit up to 20% of GTI in the case of any other individual Maximum limit of deduction is ₹ 1,50,000 (see Section 80CCE ). S ection 80CCD(1B) [Additional deduction] An employee or individual, shall be allowed a deduction in computation of his total income, whether or not any deductions is allowed under sub-section (1) Amount actual deposited or ₹ 50,000 which ever is less. On this additional contribution, the ceiling of 1,50,000 under section 80CCE will not be applicable. No deduction under this sub-section shall be allowed in respect of the amount on which a deduction has been claimed and allowed under section 80CCD(1). Section 80CCD(2) : Employer's Contribution to NPS for the benefit of Employee. Where the total income of the assessee is chargeable to tax other than u/s 115BAC(1A) Contribution by an employer towards NPS is deductible in the hands of the concerned employee in the year in which contribution is made. Limit up to 10%/14%* of salary of the employee *14% where such contribution made by CG or SG (w.r.e.f. AY 202-21) 10% where such contribution is made by any other employer [ w.e.f. 01.04.2025 ] where the total income of the assessee is chargeable to tax u/s 115BAC(1A), Contribution by an employer towards NPS is deductible in the hands of the concerned employee in the year in which contribution is made. Limit up to 14% where such contribution is made by any other employer. [ Inserted vide Finance (no. 2) Act, 2024 ] Notes : For the purpose of sec 80CCD(1) (2), Salary means = Basic Salary + DA (In Terms) As per Section 10(12A) any payment received by Assessee on closure of his account is exempt to the extent of 60% (40% is taxable) of total amount payable to him at the time of closure. In case of employee or non-employee, any amount received from NPS by the nominee legal heir on death of an assessee is Fully Exempt. The subscribers from RPF and Super-annuation Funds would be able to transfer their corpus from these funds to National Pension Scheme (NPS) without any tax implication. Taxability of amount received u/s 80CCD(3) The following amount shall be taxable, in the year of receipt, (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 amount received by the nominee, on the death of the assessee, under the circumstances referred to in clause (a), shall not be deemed to be the income of the nominee. Note: The Total Tax deduction under Section 80C and 80CCD combined together cannot exceed ₹ 2,00,000. Salary includes Basic Salary and Dearness Allowance excluding all other allowances. Eligible only for individual assesses, both salaried and self-employed. Citizens of India, including NRIs, can avail tax benefits under Section 80CCD.