Deduction in Respect of Contribution to Pension Scheme Notified by Central Government under Section 80CCD)

Deduction in Respect of Contribution to Pension Scheme as per section 80CCD of the Income Tax Act,1961. Deduction under this section is available to individual only when he made the contribution to the pension scheme approved by central government. Read List of Investment on which Income tax deduction under 80C is available 

The conditions are as follows:

  • The assessee should be an Individual
  • He is employed by Central Government or any other employer on or after January 1, 2004.
  • A self employed person can claim the benefit of this deduction
  • Any amount deposited or paid by assessee under the pension scheme notified by the central Government.

Note: if the above conditions are satisfied then the following consequences given by section 80CCD should be noted:

  • The assessee’s contribution to the notified pension scheme deductible in the year in which contribution is made
  • If the employee’s contribution exceeds 10% of salary then no deduction is available
  • If contribution by taxpayer (not being an employee) exceeds 10% of his gross total income, the excess shall not be taken into consideration for the purpose of section 80CCD
  • Contribution by the employer to the notified pension scheme is deductable u/s 80CCD(2) in the year in which contribution is made
  • No rebate will be allowed u/s 88 in respect of amount on which deduction has been claimed u/s 80CCD
  • The aggregate amount of deduction u/s 80C, 80CCC, 80CCD cannot exceed Rs.100000

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