Friends my objective is to keep people informed about the taxation or accounting topics because not everybody is from commerce background which enables him to understand income tax or accounting.
So I keep on posting different platforms. Now this time I am going to share some important aspects about deduction w.r.t contribution into a pension scheme which is under sec 80 CCD. This is a short discussion which which will try to explain this section in an easy manner.
Sec 80 CCC & Sec 80 CCD
Sec 80 CCC- Deduction for Premium Paid for Annuity Plan of LIC or Other Insurer:
When an individual pay an amount for an annuity plan of LIC or any other insurer then he gets a deduction. The pension should be from a fund referred to in Section 10(23AAB).
From 1st April 2016 onwards the limit for annula deduction has been increased from Rs 1lakh to 1.5 Lakhs.
Sec 80CCC+ Sec 80 C+ Sec 80 CCD(1) cannot exceed Rs. 1.5 Lakhs.
Sec 80 CCD- Deduction for Contribution to Pension Account
There is much confusion on this deduction.
There basically 3 parts of this deduction
Part 1-Sec 80 CCD(1):
Deduction to a salaried is allowed if he makes deposits to his pension account. The limit of deduction is 10% of (Salary+ DA if forming part of retirement benefits)
Here the maximum limit is Rs. 1,50,000/-
Sec 80 C + Sec 80 CCD(1) must be within 1,50,000/
Part 2-Sec 80 CCD 1(B):
For an additional deduction of Rs.50,000/- Sec 80 CCD(1B) is introduced. If the taxpayer deposits to his NPS account then he gets this deduction.
This is over and above the limit of Sec 80 C & Sec 80 CCD (1) i.e. Rs.1,50,00/-.
Part 3-Sec 80 CCD(2): This deduction is w.r.t to Employer’s contribution to employee’s pension account.
Lowest of the following will be eligible for deduction :
1.Actual Contb by Employer
2.10 % (Basic+DA)
3.Gross Total Income.
This deduction is also over and above the limit of sec 80 C & Sec 80 CCD(1) & Sec 80 CCD(1B)
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