PENSION SCHEME IN
CASE OF AN EMPLOYEE JOINING CENTRAL GOVERNMENT OR ANY OTHER EMPLOYER ON OR
AFTER JANUARY 1/4/2004
New pension
scheme (NPS) is applicable to new entrants to Government service or any other
employer. As per the scheme, it is mandatory or persons who come under
this scheme, to contribute 10 per cent of salary every month towards their
pension account. A matching contribution is required to be made by the
employer to the said account. The tax treatment under the new scheme is
as follows -
Click here to download the Automatic Income Tax Preparation Tax Sheet + Salary Sheet+Automatic HRA Exemption Calculation + Form 16 Part B for the Financial Year 2013-14 For Govt Employees
- 1. Contribution by the
employer to NPS is first included under the head "Salaries" in
hands of the employee.
- 2. Such contribution is
deductible (to the extent of 10 per cent of the salary of the employee)
under section 80CCD.
- 3. Employee's contribution to
NPS (to the extent of 10 per cent of the salary of the employee) is also
deductible under section 80CCD. And the Employer’s Contribution to the
Pension Fund will be goes to U/s 80 CCD(2) as per the New CBDT Notificate.
- 4. When pension is received
out of the aforesaid amount, it will be chargeable to tax in the hands of
the receipient.
