Section 80CCD deduction can be availed by taxpayers who have made contributions to a pension fund like National Pension Scheme or Atal Pension Yojana. In case of employment, upto 10% of the salary in the previous year can be claimed as a deduction. For all other cases, 10% of the gross total income in the previous year is allowed as deduction. In addition to claiming deduction under Section 80CCD, taxpayers can also claim a deduction of upto Rs.50,000 for contribution to National Pension Scheme. The deduction for contribution to National Pension Scheme is admissible over and above the ceiling of deduction of Rs.1.5 lakhs under section 80C, 80CCC and 80CCD.
If a taxpayer closes or opts out of the pension scheme, the whole amount received by the taxpayer would be deemed to be income of the taxpayer in the previous year and chargeable to income tax. However, if the assessee uses the whole amount received in the previous year for purchasing an annuity plan in the same previous year, then the amount received will not be treated as income. Also, of the amount standing to the credit of an assessee is received by a nominee, on death of the assessee, then the amount will not be deemed to be the income of the nominee.
After section 80CCC of the Income-tax Act, the following section shall be inserted, namely:
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