Section 80CCD deductions can be claimed for both NPS and Atal Pension Yojana contributions. The total deduction limit for Sections 80C + 80CCC + 80CCD(1) + Section 80CCD(1B) = ₹ 2,00,000. An additional deduction of ₹ 50,000 can be claimed under Section 80 CCD(1B) for self-contributions made to NPS or APY.
These income tax deductions section is for investments made in a pension scheme notified by the central government. 80CCD (1) deals with the investment or contribution made by an employer to such a pension scheme whereas section 80CCD (2) deals with employer contribution to an employee's pension account.
Employer's contribution to NPS is allowed as deduction under section 80CCD(2) while computing total income of the employee. However, the amount of deduction cannot not exceed 14% of salary in case of central government employees and 10% in case of any other employee.
A salaried individual can claim a deduction under 80CCD to the extent of 10% of the salary (Basic + DA) and a self-employed individual can claim a deduction up to the extent of 10% of the gross annual income. The maximum quantum of the claim under 80CCD (1) and 80CCD (2) is 1.50 Lakhs.
Any individual who is Subscriber of NPS can claim tax benefit under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE. An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B).
There is another section, Section 80 CCD (1B) which allows a further deduction of INR 50,000, over and above the deduction available under Section 80C for INR 1.5 lakhs. The deduction under Section 80 CCD (1B) is allowed if you invest towards the National Pension Scheme (NPS) offered by the Government of India.
Yes. As an employee, you can split your NPS contribution between Section 80C and Section 80CCD(1B) of the Income Tax Act to make the most of tax benefits.
The tax benefit under section 80CCD (2) of the Income-tax Act can be availed only if the employer is willing to contribute to the NPS account of an employee. If the employer is willing, then using this route, investment in NPS account will exceed Rs 2 lakh in financial year.
Sections 80CCD, 80CCC and 80C
The benefits of Section CCD fall under those of 80C, i.e., the deductions claimed u/s 80CCD cannot be claimed again in 80C. The overall limit of deductions under 80C, 80CCC and 80CCD is Rs. 2 lakh, with an additional deduction of Rs. 50,000 allowed u/s 80CCD sub section 1B.
The maximum amount that an individual is eligible for deduction is either the employer's NPS contribution or 10% of basic salary plus Dearness Allowance (DA). Under Section 80CCD(1B), individuals can claim an additional amount of Rs. 50,000 for any other self-contributions as NPS tax benefit.
You can claim any additional self contribution (up to Rs 50,000) under section 80CCD(1B) as NPS tax benefit. The scheme, therefore, allows a tax deduction of up to Rs 2 lakh in total.
Any person is qualified for tax on savings under sections 80C and 80CCC of the income tax act. However, Hindu Undivided Families (HUF) cannot avail these benefits. As per the Income Tax Department, a singular citizen is qualified to get these deductions up to ₹1,50,000 subject to the informed conditions.
How to claim deduction on both my own (employee) and my employer's contribution? A resounding yes! If your employer is contributing to your NPS account you can claim deduction under section 80CCD(2). There is no monetary limit on how much you can claim, but it should not exceed 10% of your salary.
Equity mutual funds have the potential to outperform the NPS over time. Historically, the equity assets class has given a substantially higher return than any other asset class.
While Tier 1 of the NPS is a rigid retirement plan, Tier 2 gives you more flexibility for withdrawals, if needed. The idea is to promote a government-backed product, which offers equity exposure, helps you to plan for retirement (Tier 1), and also provides an option to invest for other life goals (Tier 2).
Deduction is allowed if the assessee has paid any amount towards any annuity plan of Life Insurance Corporation of India (LIC) or any other insurer for receiving pension from pension fund.
80CCC allows deduction for payment towards annuity pension plans Pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of receipt.
One of the ways in which tax-exemption on additional Rs 50000 income can be claimed under Section 80CCD (1B) is by investment in NPS. NPS or National Pension Scheme is a government-backed annuity instrument which can be availed by any eligible citizen of India.
Limit raised to INR 5 lakh from INR 2 lakh
If your NPS corpus amount is less than INR 5 lakh, you can now withdraw it lump sum. There's no need to invest in an annuity in this case.
For instance, if you are an individual making investments of Rs 1.5 lakh that qualify for tax exemption under Section 80C, and also contribute Rs 70,000 per annum towards NPS, you will be able to claim a deduction of Rs 2 lakh (Rs 1.5 lakh under 80C, 80CCD and Rs. 50,000 under Section 80CCD (1B).
Can You Invest in Both PPF and NPS? In case you wish to make higher contributions to your retirement goal, you can invest in both PPF and NPS. One can choose PPF investments for a fixed income part of his portfolio and NPS for market-linked returns.
Anyone who is in the age group of 18-60 years and is an Indian citizen can open an NPS account. So if you are looking to open an NPS account for your wife, doing it at the earliest is best for your post-retirement goals.
You can open a National Pension System (NPS) account in the name of your spouse. The NPS account will give a lump sum amount to your spouse on attaining the age of 60 years. Along with this, they will also have regular income in the form of a pension every month.