PENSION SCHEME IN CASE OF AN EMPLOYEE JOINING CENTRAL GOVERNMENT OR ANY OTHER EMPLOYER ON OR AFTER JANUARY 1/4/2004

             New pension scheme (NPS) is applicable to new entrants to Government service or any other employer.   As per the scheme, it is mandatory or persons who come under this scheme, to contribute 10 per cent of salary every month towards their pension account.   A matching contribution is required to be made by the employer to the said account.   The tax treatment under the new scheme is as follows -

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  • 1. Contribution by the employer to NPS is first included under the head "Salaries" in hands of the employee. 
  • 2. Such contribution is deductible (to the extent of 10 per cent of the salary of the employee) under section 80CCD.
  • 3. Employee's contribution to NPS (to the extent of 10 per cent of the salary of the employee) is also deductible under section 80CCD. And the Employer’s Contribution to the Pension Fund will be goes to U/s 80 CCD(2) as per the New CBDT Notificate.
  • 4. When pension is received out of the aforesaid amount, it will be chargeable to tax in the hands of the receipient.  
5. The aggregate amount of deduction under sections 80C, 80CCC, 80CCD cannot exceed Rs. 1,00,000.00.   From the assessment year 2012-13, and the employer's contribution towards NPS is not considered for the purpose of monetary ceiling of Rs. 1,00,000.00. But the Section 80CCD(2) Is excluding the Rs.1,00,000/- The all of Under Section 80C,80CCC and 80CCD(1) under the Section 80 EEE which not more than 1 lakhs

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