Section 125 — Deduction in respect of contribution to Agnipath Scheme. Successor to s.80CCH of the 1961 Act.
Section 125 is in Chapter VIII — Deductions to Be Made in Computing Total Income, which runs from section 122 to section 154.
Sub-section (1) allows an individual enrolled in the Agnipath Scheme who subscribes to the Agniveer Corpus Fund on or after 1 November 2022 a deduction, in computing total income, of the whole of the amount paid or deposited in his account in that Fund during the tax year. Sub-section (2) gives a separate deduction of the whole of any amount the Central Government contributes to his account in the same Fund.
Sub-section (3) defines the Agnipath Scheme by reference to letter No. 1(23)2022/D(Pay/Services) dated 29 December 2022 of the Ministry of Defence, and the Agniveer Corpus Fund as a fund holding the consolidated contributions of all Agniveers, the Central Government's matching contributions, and interest on both.
The Fund pools an Agniveer's own subscription with a matching contribution from the Central Government, and both would otherwise bear tax in his hands. The section removes that charge from both sides of the pool, and caps neither.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Deduction for the individual's own subscription | The whole of the amount paid or deposited | Paid or deposited in his account in the Agniveer Corpus Fund during the tax year; no ceiling is stated | Sub-section (1) |
| Earliest subscription date that qualifies | On or after 1 November 2022 | The individual must have subscribed to the Fund on or after that date | Sub-section (1) |
| Deduction for the Central Government's contribution | The whole of the amount so contributed | Where the contribution is made to the assessee's account in the Fund | Sub-section (2) |
There are two deductions, not one, and they are independent: the individual's own subscription under sub-section (1) and the Central Government's contribution under sub-section (2). Neither is capped, which is unusual for a Chapter VIII deduction. The interaction that decides the real case is with section 202 — under the default regime, section 202(2)(a)(xii) keeps section 125(2) alive but not section 125(1), so an Agniveer who has not opted out of the default rates loses the deduction for his own subscription while keeping the one for the Government's contribution.
An Agniveer deposits Rs 90,000 into his Agniveer Corpus Fund account during the tax year and the Central Government contributes a matching Rs 90,000 to the same account. Sub-section (1) allows the whole Rs 90,000 he paid and sub-section (2) the whole Rs 90,000 contributed for him. If he is taxed under the default regime in section 202, only the sub-section (2) amount survives: section 202(2)(a)(xii) preserves section 125(2) alone out of Chapter VIII.
In the deduction schedule of the individual's return of income. The section names no form and no authority; the interaction that matters in practice is with the regime chosen under section 202.
shall be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited in his account in the said Fund during the tax year
"Agniveer Corpus Fund" means a fund in which consolidated contributions of all the Agniveers and matching contributions of the Central Government along with interest on both these contributions are held
See the full 1961 to 2025 concordance.