Employer's Contribution towards Pension Fund/Scheme- Exemption

[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

 

 

[CAGOPALJI AGRAWAL]

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

AI Summary

Employer contribution exemption for superannuation and notified pension schemes may be claimed concurrently, but withdrawals are taxable. Employer contribution to an approved superannuation fund is exempt up to a prescribed ceiling and employer contribution to a notified pension scheme is exempt up to a salary-linked percentage; the query asks if both exemptions can be claimed concurrently for the same year. The guidance indicates both exemptions can be availed together in principle, while cautioning that withdrawals from the pension arrangement remain taxable on distribution.