Employeeâs contribution â Section 80CCD (1) Allowed to an Individual who makes deposits to his/her Pension account. Maximum deduction allowed is 10% of salary (in case of taxpayer being an employee) or 10% of gross total income (in case of tax payer being self-employed) or Rs 1, 50,000 whichever less is.
This applies to current, former and retired employees. Premiums you pay for employees' group life insurance that is not group term insurance or optional dependent life insurance are also a taxable benefit.
At the current time, CONUS COLA is the only taxable allowance. However, under federal law, all allowances created after 1986 are supposed to be taxable. Annual âCOLAâ goes into base pay which is taxable â COLA would be better named Annual base pay increase due to higner cost of living.