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

 

 

AI Summary

Can employees claim dual tax exemptions on employer pension contributions under Sections 17(2)(vii) and 80CCD(2) in one year? An individual inquired about tax exemptions on employer contributions to pension funds and schemes. Specifically, they questioned if an employee could claim separate exemptions for contributions under Section 17(2)(vii) and Section 80CCD(2) in a single year, potentially allowing for a tax-free income of Rs. 2 lakh on a Rs. 10 lakh salary. The contributor believed this was possible, as Section 80CCD(2) contributions are outside the Rs. 1 lakh limit set by Section 80CCE. A respondent agreed with this interpretation but noted that withdrawals from such schemes are taxable.