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30/05/2011

DEDUCTION UNDER NEW PENSION SCHEME NOT INCLUDED IN 1 LAKH SAVINGS LIMIT

DEDUCTION UNDER NEW PENSION SCHEME NOT INCLUDED IN 1LAKH SAVING LIMIT

The New Pension Scheme (NPS) was introduced by the
Union Government in 2003. According to the new scheme,
employees appointed on or after January 1, 2004 will
contribute 10 per cent of their Pay and Dearness Allowance
to the Pension Fund Regulatory and Development Authority
under the Ministry of Finance. An equal amount will be
contributed by the Centre. The scheme is mandatory for
Government employees, but optional for other citizens of
India. NPS merely declared that tax benefits would be
applicable as per the Income Tax Act 1961 as amended
from time to time.
THE NEW SECTION 36(1
The Finance Act, 2011 has inserted a new Section 36 (1)(iva)
with effect from assessment year 2012-13 to provide that
an assessee will get a deduction in respect of contribution
towards a pension scheme referred in Section 80CCD of the
Act on account of an employee up to 10 per cent of the
salary of the employee in the previous year. For this
purpose, ‘salary' includes DA, if the terms of ‘employment'
so provide, but excludes all other allowances and
perquisites.
Currently, contribution made by an employer towards a
recognised provident fund, an approved superannuation
fund or an approved gratuity fund is allowable as a
deduction from business income under Section 36, subject
to certain limits.
However contribution made by an employer to the NPS is
not allowed as a deduction. The newly inserted clause
provides that any sum paid by the assessee as an employer
by way of contribution towards the pension scheme on
account of an employee to the extent it does not exceed 10
per cent of the salary of the employee in the previous year,
shall be allowed as deduction in computing the income
under the head ‘Profits and gains of business or profession'.
No doubt, such deduction would have been available under
Section 37. The matter, however, is placed beyond doubt by
the new Section. It should, however, be noted that
deduction would be available only upon actual payment. The
term ‘employee' will include all employees including
Director-employees. The limit of 10 per cent will apply to
each employee individually. The Finance Act has also
amended Section 40A (9) for this purpose.
LIMITS ON DEDUCTION
Section 80CCE provides that the aggregate amount of
deduction under Section 80CCC and 80CCD shall not exceed
Rs 1 lakh. The Finance Act, 2011 provides that contribution
made by the Central Government or any other employer to
NPS shall be excluded while computing the limit of Rs
1,00,000. The contribution by the employee to the NPS will
be subject to the limit of Rs 1,00,000.
At the same time, deduction in respect of contributions by
the Central Government or any other employer to NPS
available under Section 80CCD (2) will not be subject to the
limit specified in Section 80CCE. This provides a leeway for
employees to seek a restructuring of the pay. Employers
may be willing to include the contribution to the NPS in the
pay package and claim 10 per cent of the salary as
deduction. Depending on the pay scales, such restructuring
may offer a benefit to both the employer and the employee.
Deduction for contribution to the NPS in the hands of the
employer and the exclusion of such contributions in the
hands of the employees in computing the exemption under
Section 80C will mean a morale booster for the employer
and the employee.
(The author is a former Chief Commissioner of Income-Tax.)
source www.simpletax.org

1 comment:

  1. Is their any residence period as shunters before promoting to LP/G? specific rules regarding promotion from shunters to LP/G

    ReplyDelete

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PME Due Date

Master Circular No. 25



Copy of Railway Board’s letter No. 69/H/3/11 dated 06.12.1974



Subject: Implementation of the Recommendations of the Visual Sub-Committee.



6. Periodical re-examination of serving Railway Employees:



6.l. In order to ensure the continued ability of Railway employees in Classes A l, A 2, A 3, B l and B 2 to discharge their duties with safety, they will be required to appear for re-examination at the following stated intervals throughout their service as indicated below:



6.1.1. Classes A l, A 2 and A 3 —At the termination of every period of three years, calculated from the date of appointment until they attain the age of 45 years, and thereafter annually until the conclusion of their service.



Note: (l) The staff in categories A l, A 2 and A 3 should be sent for special medical examination in the interest of safety under the following circumstances unless they have been under the treatment of a Railway Medical Officer.



(a) Having undergone any treatment or operation for eye trouble irrespective of the duration of sickness.



(b) Absence from duty for a period in excess of 90 days.



(2) If any employee in medical category A has been periodically medically examined at any time within one year prior to his attaining the age of 45, his next medical examination should be held one year from the due date of the last medical examination and subsequent medical examination annually thereafter.



If, however, such an employee has been medically examined, at any time earlier, than one year prior to his attaining the age of 45, his next medical examination should be held on the date he attains the age of 45 and subsequent medical examination annually thereafter.




Ammendment: It was ammended in 1993 as below



Age Group PME Due



Age 00-45 every 4yrs



Age 45-55 every 2yrs



Age 55-60 every year
Details:-
As per Rly Bd's Guideline of Medical Exam issued vide LNo. 88/H/5/12 dated 24-01-1993

a) PME would be done at the termination of every period of 4 years from date of appointment / Initial medical Exam till the date of attainment of age of 45 years, every 2 years upto 55 years & there after annual till retirement.
b) Employees who has been periodically examined at any time within 2years prior to his attaining the age of 45years would be examined after 2years from the date of last PME & subsequent PME for every 2years upto 55years age.Of

NRMU 4 you
SMLokhande





6.1.2. Classes B-1 and B-2—On attaining the age of 45 years, and thereafter at the termination of every period of five years.