As per provision of IT
PENSION SCHEME IN THE CASE OF AN EMPLOYEE JOINING CENTRAL GOVERNMENT OR ANY OTHER EMPLOYER ON OR AFTER JANUARY 1, 2004 - New pension scheme is applicable to new entrants to government service or any other employer. As per the scheme, it is mandatory for persons entering service on or after January 1, 2004, to contribute 10 percent of salary every month towards notified pension account. A matching contribution is required to be made by the employer to said account. The tex treatment under the new scheme is as follow --
1. Contribution by the employer to the notified pension scheme is first included under the head "salaries" in the hands of the employee.
2. Such contribution is deductible (to the extent of 10 percent of the salary of the employee) under section 80CCD.
3. Employee's contribution to the notified pension scheme (to the extent of 10 percent of the salary of the employee) is also deductible under section 80CCD.
4. When pension is received out of aforesaid amount it will be chargeable to tax in the hands of recipient.
5. No deduction allowed under section 80C in respect of amounts on which deduction has been claimed under section 80CCD.
6. "Salary" for the purpose of Points 1 and 2 includes dearness allowance, if the terms of employment so provide, but excludes all other allowance and perquisites.
7. The aggregate amount of deduction under section 80C, 80CCC and 80CCD cannot exceed Rs. 1,00,000.