Save taxes and secure future -pension scheme of Central Government 80CCD

(1) Where an individual employed by the Central Government deposits any amount under a pension scheme notified by the Central Government, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed 10% of his salary in the previous year. (2) Where, in the case of an assessee referred to in sub-section (1), the Central Government makes any contribution to his account referred to in that sub-section, the assessee shall be allowed a deduction in the computation of his total income, of the whole of the amount contributed by the Central Government as does not exceed 10% of his salary in the previous year. Further, where any amount standing to the credit of the assessee in his account, (a) On account of closure or his opting out of the pension scheme; or (b) As pension received from the annuity plan purchased or taken on such closure or opting out, the whole of the amount referred above  shall be deemed to be the income of the assessee or his nominee, as the case may be, in the previous year in which such amount is received, and shall accordingly be charged to tax as income of that previous year. However, 1st April 2005, deduction u/s 80CCD shall be subject to a maximum aggregate ceiling of Rs. 100000 taking into account deduction u/s 80C, 80CCC & 80CCD. For the purposes of this section, salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. Further, from FY 2008-09, the receipts/withdrawal out of deposits of notified pension scheme will not be taxable where they are used for purchasing an annuity plan within the same year. We at Taxmantra.com specialises in individual taxation. We at Taxmantra.com has launched a special offer “Start Now for March 2011”, wherein you can avail – (i)  Efficient tax planning for tax year ending March 2011; (ii) Full year tax support through mail, phone and live chat (10am to 6pm, monday to friday); and (iii) Filing of your income tax return for tax year ending March 2011. Come and join us in pursuit of simplifying individual taxation! Alok Patnia Founder and Director at Taxmantra.com

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