Maharashtra Government had implemented a new Pension Scheme i.e. DCPS w.e.f. 01.11.2005. A appointment Employee on or after 01.11.2005 the new pension scheme i.e. DCPS is applicable in respect of contribution of pension fund. In this regard a question is that amount of contribution fund paid by the employer to employee is whether taxable or not. The following explanation is clarify to unwanted discrepancy of contribution of pension fund:
Salary included :-
(i) wages;
(ii) any annuity or pension;
(iii) any gratuity4;
(iv) any fees4, commissions, perquisites or profits4 in lieu of or in addition to any salary or wages;
(v) any advance of salary;
5[(va) any payment received by an employee in respect of any period of leave not availed of by him;]
(vi) the annual accretion to the balance at the credit of an
employee participating in a recognised provident fund, to the extent to
which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule;
(vii) the aggregate of all sums that are comprised in the
transferred balance as referred to in sub-rule (2) of rule 11 of Part A
of the Fourth Schedule of an employee participating in a recognised
provident fund, to the extent to which it is chargeable to tax under
sub-rule (4) thereof; and
6[(viii) the contribution made by the Central Government 7[or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD;]
On reading above meaning of
salary, it is very much clear that the contribution made by employer
under a pension scheme is part of salary which is taxable and deduction
under section 80CCD will be allowed for the amount which has been
contributed by the employer in new pension section. Therefore complete knowledge regarding section 80CCD is also required in the interest of employee.
28[Deduction in respect of contribution to pension scheme of Central Government.29
80CCD. (1) Where an assessee, being an individual employed by the Central Government 30[or any other employer] on or after the 1st day of January, 2004,31[or any other assessee, being an individual] has in the previous year paid or deposited any amount in his account under a pension scheme
notified or as may be notified by the Central Government, he shall, in
accordance with, and subject to, the provisions of this section, be
allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited 32[as does not exceed,—
(a) in the case of an employee, ten per cent of his salary in the previous year; and
(b) in any other case, ten per cent of his gross total income in the previous year.]
(2) Where, in the case of an assessee referred to in sub-section (1), the Central Government 33[or
any other employer] 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 33[or any other employer] as does not exceed ten per cent of his salary in the previous year.
(3) Where any amount standing to the credit of the assessee in his
account referred to in sub-section (1), in respect of which a deduction
has been allowed under that sub-section or sub-section (2), together
with the amount accrued thereon, if any, is received by the assessee or
his nominee, in whole or in part, in any previous year,—
(a) on account of closure or his opting out of the pension scheme referred to in sub-section (1); or
(b) as pension received from the annuity plan purchased or taken on such closure or opting out,
the whole of the amount referred to in clause (a) or clause (b)
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.
34[(4) Where any amount paid or deposited by the assessee has been allowed as a deduction under sub-section (1),—
(a) no rebate with reference to such amount shall be allowed under section 88 for any assessment year ending before the 1st day of April, 2006;
(b) no deduction with reference to such amount shall be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.]
35[(5) For the purposes of this section, the assessee shall
be deemed not to have received any amount in the previous year if such
amount is used for purchasing an annuity plan in the same previous year.]
Explanation.—For the purposes of this section, "salary" includes
dearness allowance, if the terms of employment so provide, but excludes
all other allowances and perquisites.]
