The government on Thursday proposed to insert a new section 80CCD to provide for deduction from the total income of an individual employed by the government on or after January 1 this year, of amounts paid by him in the pension account.
This would be subject to a maximum of ten per cent of his salary, Finance Minister P Chidambaram said in the Lok Sabha while presenting the 2004-05 Budget.
The scheme provides further that the terminal benefits would be taxed as income in the year in which such amounts are received by the assessee or his nominee on closure of the account or while opting out of the pension scheme, which came into effect from January 1 this year.