All About Personal Tax Proposals in Union Budget 2022

Correction of Anomaly in Section 80CCD with respect to National Pension System (NPS) contributions for state government employees

Section 80CCD(2) provides deduction of upto 14% for the contribution made by Central Government for its employees. However, this limit is 10% for State Government employees. Hence to correct this anomaly , Section 80CCD(2) is sought to be amended in order to ensure that State government employees as well , get the full benefit of contribution upto 14%.

This amendment will take effect retrospectively from 1st April 2020 and will accordingly apply for subsequent assessment years to ensure that no additional tax liability arises on any contribution made in excess of 10% during such time.

Condition of releasing of annuity to a disabled person- Amendment of Section 80DD

A differently-abled person’s parent or guardian can enroll in an insurance plan for him or her. As per the existing provisions ofsection 80DD, the deduction is allowed to the parent or guardian of such persons only if the lump-sum payment or annuity is accessible to the differently abled person upon the death of the subscriber, i.e. parent or guardian.

In a situation where policy terms provide that on subscriber attaining the age of 60, the plan will mature, is not covered under this deduction. Hence, to remove the hardship, such a term is also sought to be included in the eligibility for availing the deduction. It is also provided that the amount received by the dependent on such maturity shall also not be taxed in his/her income.

This amendment will take effect from 1st April 2023 and hence, will accordingly apply in relation to the assessment year 2023-24 and subsequent assessment years.

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