Recently for current Financial Year and Assessment Year 2015-16, the current Government after Budget-2014 has issued a circular for Salaried Employee regarding computation of income. In this circular many amendments has been made including enhancement of Tax Exemption Limit. Yesterday the First part has published on this blog. To read Part-I Deductions under Chapter VI-A for Salaried Employee for Asstt. Year 2015-16 Click Here. The Part-II is as under :
DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT FOR THE ASSTT. YEAR 2015-16 FOR SALARIED EMPLOYEE
Deduction in respect of contribution to certain pension funds (Section 80CCC)
Section 80CCC allows an employee deduction of an amount paid or deposited out of his income chargeable to tax 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 referred to in section 10(23AAB). However, the deduction shall exclude interest or bonus accrued or credited to the employee's account, if any and shall not exceed Rs. 1 lakh.
However, if any amount is standing to the credit of the employee in the fund referred to above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of
- Surrender of annuity plan whether in whole or part
- Pension received from the annuity plan
then the amount so received during the Financial Year shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.
Deduction in respect of contribution to pension scheme of Central Government (Section 80CCD):
Section 80CCD(1) allows an employee, being an individual employed by the Central Government or by any other employer on or after 01.01.2004, or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB&PR dated 22.12.2003 (National Pension System –NPS) or as may be notifed by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites). The deduction under section 80CCD(1) shall not exceed Rs. 1,00,000/-.
As per Section 80CCD(2), where any contribution in the said pension scheme is made by the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year.
If any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above, and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of
- Closure or opting out of the pension scheme or
- Pension received from the annuity plan purchased and taken on such closure or opting out
then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax.
Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.
Further it has been specified that w.e.f 01.04.09 that any amount received by the employee from the new pension scheme shall be deemed not to have received in the previous year if such amount is used for purchasing an annuity plan in the same previous year.
It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed Rs.1,50,000/-. However, the deduction under Section 80CCD(1)shall not exceed Rs.1,00000 but contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit ofRs.1,00,000/- provided under this Section.
Deduction in respect of investment made under an equity savings scheme (Section 80 CCG):
Section 80CCG provides deduction w.e.f .assessment year 2013-14 in respect of investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has been notified vide SO No 2777 E dated 23.11.2012 as a scheme under this section. The scheme was modified in December 2013 vide notification SO No. 3693 dated 18.12.2013 as RGESS 2013.
The deduction under this section in accordance with RGESS 2013, is available if following conditions are satisfied:
- The assessee is a resident individual
- His gross total income does not exceed Rs. 12 lakhs;
- He has acquired listed shares in accordance with a notified scheme or listed units of an equity oriented fund as defined in section 10(38);
- The assessee is a new retail investor;
- The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
- The assessee satisfies any other condition as may be prescribed.
Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares/units. However, the amount of deduction under this provision cannot exceed Rs. 25,000. Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.
This deduction is allowed for three consecutive assessment years beginning with the AY in which the listed equity shares or units were first acquired. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any other year.
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