Employer's Contribution towards Pension Fund/Scheme- Exemption, Income Tax

[Sunil Agarwal]

Employer's contribution to an approved superannuation fund is exempt from tax u/s 17(2)(vii) to the extent of Rs. one lakh per annuam. Further, as per provision of Section 80CCD (2) contribution made by the employer to a notified pension scheme is exempt from tax to the extent of 10% of salary. A doubt has arisen whether an employee may claim exemption towards pension fund and notified pension scheme separately for a year.

For emample, if the salary of an employee is Rs. 10 lakh, can he contibute 1 lakh each under u/s 17(2) as well as u/s80DD(2) so that he may claim tax free income for Rs. 2 lakh. I would like to mention that the contribution u/s 80DD(2 is outside the limit of Rs. 1 lakh as mention u/s 80CCE w.e.f. 1.04.2012.

To my understanding, it is possible. I need views of Experts

 

 

Posts / Replies

[GOPALJI AGRAWAL]

Sunil Ji, you seem correct. But please note that withdrawals from such pension scheme is taxable.