The Central Government had notified Atal Pension Yojana in respect of eligible deduction under section 80CCD of the Income Tax Act, 1961. Section 80CCD contains provision related to thee types of contribution made by assessee and employer of assessee which are eligible for claiming deduction under respective sub section and under section 10 exemption is also allowed to some extend from the amount received on closure of account or opting out of the pension scheme or on partial withdrawal. Let us discussed all the provision one by one.
- Deduction Under section 80CCD (1): Contribution made by employee or any other assessee.
- Allowable deduction in respect of Individual has in the previous year paid or deposited any amount in his account under a pension scheme notified,
- Maximum allowable deduction is as under
(a) in the case of an employee, 10% of his salary in the previous year; and
(b) in any other case, 20% of his gross total income in the previous year
- Deduction Under Section 80CCD (1B): Contribution made by employee or any other assessee.
- Allowable deduction in respect of Amount paid or deposited in the previous year in his account under a pension scheme notified maximum Rs. 50,000/-.
- This deduction allowed in addition to the allowable deduction under section 80CCD (1).
- This deduction is in addition to limit Rs. 1,50,000/- specified under section 80CCE.
Deduction Under Section 80CCD (2): Contribution made by Central Government or employer.
- Allowable deduction: Amount contributed by the Central Government or any other employer maximum 10% of his salary in the previous year.
- This deduction allowed from the contribution made by Central Government or employer and is in addition to sections 80CCD (1) and 80CCD(1B).
Taxability of amount received on closure or premature withdrawal of Pension Scheme.
- Amount received on closure of or his opting out is 40% exempt and 60% taxable as per section 10(12A).
- Any amount received on partial withdrawal is 25% exempt and 75% taxable as per section 10(12B).