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taxability of employees pension

Neha (Article) (118 Points)

17 July 2010

dear frnds...

wud anyone plz tel me about the taxability of pension amount received by an employee after a service of two years. this pension is the amount which is diverted from employer's contribution to epf to employees pension scheme which is i think 8.33%.

regards

neha babbar

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6 Replies

Sagar Zankhariya (Audit Assist.) (278 Points)
Replied 17 July 2010

Hi.... Neha

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.

Regards

Sagar Zankhariya

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 17 July 2010

dear neha

pension amount is taxable under head salaries.

regards

tarun rustagi

Somshekar (Rankholder) (-) (158 Points)
Replied 18 July 2010

Any Pension Received during the service is always taxable under the head salaries

Salah (CA Finalist....!!) (40 Points)
Replied 18 July 2010

As per section 10(10A). It is fully taxable as salary

SUDHIR & PRADEEP JI (CA FINAL+LLB + DISA) (2299 Points)
Replied 18 July 2010

it is taxable in head of salary

RAMESHWAR KUMAR MISHRA (ARTICLE) (45 Points)
Replied 21 March 2012

Is any employee of private statue is being receiving pension from his contibuted money taxable under the head salary? if yes what would be the name of employer shown at the time of filling of return of income. Is it taxable under head income from other sources.