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mrajeev
16-03-2009, 06:32 AM
Can someone clarify about the way Govt. contribution to NPS should be treated while calculatin IT ? Whether the amout is to be added to the gross income and allowed deduction under Sec.80C or it is not included in the income but allowed deduction ? The provisions in IT circular 9/2008 is bit confusing. for eg. if the Basic + GP + DA is Rs.10000/-, the individual contribution is 1000/- and Govt contribution is 1000/-. Whether the total income (monthly) be treated as 11000/- (with Govt Contribution to NPS) or 10000/- and the deduction is 2000/- or 1000/-. Shall be grateful for a fast response as F/Y is ending soon.

badri mannargudi
16-03-2009, 11:08 PM
Dear querist,
Going by the circular you have referred to, in the example given by you, the contribution of Rs.1000 by the Govt (employer) is not to be included to the salary. If an employer( obviously other than Govt) gives 1500 (10% of salary worksout at Rs.10000, then Rs,.500 would be added to the salary for the purpose of reckoning the Income tax Liability. (Definition of the term, "salary" given on page 15 of the said circular refers).

With regards,
Badri

ram
17-03-2009, 02:21 PM
Can someone clarify about the way Govt. contribution to NPS should be treated while calculatin IT ? Whether the amout is to be added to the gross income and allowed deduction under Sec.80C or it is not included in the income but allowed deduction ? The provisions in IT circular 9/2008 is bit confusing. for eg. if the Basic + GP + DA is Rs.10000/-, the individual contribution is 1000/- and Govt contribution is 1000/-. Whether the total income (monthly) be treated as 11000/- (with Govt Contribution to NPS) or 10000/- and the deduction is 2000/- or 1000/-. Shall be grateful for a fast response as F/Y is ending soon.

Of course Badriji's reply for income part is absolutely correct. As for as deduction part is concerned, you are eligible for Sec 80 C deduction of Rs.2000 as both Govt's contribution and contribution of individual can be taken for exemption under Section 80 C

badri mannargudi
17-03-2009, 05:09 PM
Of course Badriji's reply for income part is absolutely correct. As for as deduction part is concerned, you are eligible for Sec 80 C deduction of Rs.2000 as both Govt's contribution and contribution of individual can be taken for exemption under Section 80 C


Dear querist,
Going by the circular you have referred to, in the example given by you, the contribution of Rs.1000 by the Govt (employer) is not to be included to the salary. If an employer( obviously other than Govt) gives 1500 (10% of salary worksout at Rs.10000, then Rs,.500 would be added to the salary for the purpose of reckoning the Income tax Liability. (Definition of the term, "salary" given on page 15 of the said circular refers).

With regards,
Badri

But the overall ceiling of Rs.1,00,000 only is available for deduction under the said Section 80 C. In the given example, The excess amount of Rs.500 shall be added to income and the said amount by virtue of being credited to athe querist's CPF account only, the benefit under 80 C would of course be available. As i felt the query was outside the purview of 80 C, I had not mentioned it. Nevertheless, thankyou, Shri Ramjeee, for your modification of my reply.
With regards,
Badri

RKSINGH
08-07-2009, 07:52 PM
The govenment contribution in NPS is included in the gross salary or not

ravi24june
26-10-2010, 01:12 PM
(3) "Salary" includes wages, fees, commissions,
perquisites, profits in lieu of, or, in addition to salary,
advance of salary, annuity or pension, gratuity, payments in
respect of encashment of leave etc. It also includes the
annual accretion to the employee's account in a
recognized provident fund to the extent it is chargeable to tax
under rule 6 of Part A of the Fourth Schedule of the Incometax
Act. Contributions made by the employer to the account
of the employee in a recognized provident fund in excess of
12% of the salary of the employee, along with interest
applicable, shall be included in the income of the assessee for
the previous year. Any contribution made, in excess of 10%, by
the Central Government or any other employer to the account of
the employee under the New Pension Scheme as notified vide
Notification No. F.N. 5/7/2003- ECB&PR dated 22.12.2003(enclosed
as Annexure-VA) and referred to in section 80CCD (para 5.4(C) of
this Circular) shall also be included in the salary income.
Other items included in salary, profits in lieu of salary
and perquisites are described in Section 17 of the Income-tax
Act. It may be noted that, since salary includes pensions,
tax at source would have to be deducted from pension also,
if otherwise called for. However, no tax is required to be
deducted from the commuted portion of pension which is exempt, as
explained in clause (3) of para 5.2 of this Circular.

see http://finmin.nic.in/the_ministry/dept_revenue/tds2008-09.pdf

RKPATHAK
26-10-2010, 01:34 PM
As per income tax act this amount is to be included in gross income and since it is deposited benefit of section 80-c is granted