Savings/Contributions & Tax Benefits (Part-I)

Having previously discussed about the Investment opportunities available  under Section 80C in order to save taxes , we go ahead with the other areas where an assessee is eligible for Tax benefits in return for Contributions/Savings made:-

1. Deduction in respect of contribution to certain pension funds (Section-80CCC):-

• Deduction is permissible, under this section, only to an individual assessee.
• It is allowed in respect of any amount paid or deposited in the previous year by such individual to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund set up by LIC or any other insurer.
• The amount should be paid out of his income chargeable to tax.
• Quantum of deduction: - The whole of the amount paid or deposited (excluding bonus or interest accrued.)  Or Rs.100000/- whichever is less.
• Where deduction has been allowed u/s 80CCC, deduction u/s 80C will not be available in respect of the payment made towards the annuity plan.
• The deduction is available to Non-Resident Individual also.  

2. Deduction in respect of contribution to Pension Scheme of Central Government or any other employer (Section 80CCD)

• The deduction under this section is allowed to an assessee who is an individual and who is employed by the Central Government or any other employer or it is allowed to any other assessee being an individual (self-employed individual).The deduction is allowed on account of -

a.  Any amount not exceeding 10% of salary of the previous year paid or deposited by the employee in his account under the notified pension scheme.

b.  Any amount contributed by the employer ( i.e. Central Government or any other employer) to such pension scheme not exceeding 10% of the salary of the employee.

c.  Any amount contributed by any other assessee being an individual (self-employed individual) to such pension scheme not exceeding 10% of his gross total income in the previous year.i

• “Salary” includes Dearness allowance, but excludes all other allowances and perquisites.
• If the amount is withdrawn from notified pension scheme in the previous year and is used for purchasing an Annuity plan in the same year, it will not be taxable.

Note:-The aggregate amount of deduction under Section 80C ( discussed in the previous issues ), Sec 80CCC and Sec 80CCD shall not, in any case, exceed Rs.1,00,000/-.

- Rittique Phukan (CA)