Deduction for Contribution to Pension Scheme [Section 80CCD]
• An individual (resident or non-resident) can claim deduction for amount contributed to the National Pension Scheme (NPS), Atal Pension Yojana (APY), or NPS Vatsalya Scheme.
• Maximum deduction of Rs. 1,50,000 can be claimed for contributions to own NPS account and APY under Section 80CCD(1). Deduction is allowed up to lower of actual contribution or 10% of salary for employee; 20% of gross total income for self-employed.
• An additional deduction of up to Rs. 50,000 is available under Section 80CCD(1B) for contributions to own NPS account or NPS Vatsalya account of a minor child.
• Total deduction for individual’s own NPS contribution can be up to Rs. 2,00,000 including additional Rs. 50,000 under Section 80CCD(1B).
• Employer’s contribution deductible separately under Section 80CCD(2) and not subject to above limits.
• Deduction under Section 80CCD(2) allowed for employer’s contribution to NPS account, limited to:
14% of salary (Central/State Government employees);
14% of salary if employee opts for new tax regime under Section 115BAC;
10% of salary in other cases.
‘Salary’ includes basic salary, dearness allowance (if terms provide), and commission as % of turnover, excluding other allowances/perquisites.
• Amount received by the nominee on the death of the assessee or minor is not considered income of such person.
• Pension or annuity received on closure or opting out is fully taxable in hands of recipient.