Deduction under Section 80CCD for National Pension Scheme Contribution is one of the most popular deduction. Many users take advantages of this deduction at the time of filing of their Income tax Return. Hence today I am writing this article to discuss this most popular section in detail. So, let’s start the discussion.
Page Contents
- Basic Information about Deduction u/s 80CCD:
- 1. Section 80CCD(1) – For Contribution made by Salaried Employees or Self Employed person
- 2. Section 80CCD(1B) – Additional deduction over and above Section 80CCD(1)
- 3. Section 80CCD(2) – For Contribution made by Employer or Central Government
- Impact of Finance Act, 2020 on Section 80CCD:
Basic Information about Deduction u/s 80CCD:
This deduction basically availed by the individuals being as a salaried employee or as self employed against the contribution made towards Pension Funds notified by Central Government such as National Pension Scheme (NPS).
Now, for our better understanding we will divide this section in 3 parts, which are as under:
- Section 80CCD(1) – For Contribution made by Salaried Employees or Self Employed person
- Section 80CCD(1B) – Additional deduction over and above Section 80CCD(1)
- Section 80CCD(2) – For Contribution made by Employer for his employees
1. Section 80CCD(1) – For Contribution made by Salaried Employees or Self Employed person
This provision is applicable to all the employees i.e Government as well as Non- Government and to those people who are self- employed. In this section there is no specification for resident that means this is applicable for the Non Resident Individuals as well.
The deduction u/s 80CCD(1) quantified as follows:
- i) For Employees – 10% of his salary in the previous year
- ii) For Self Employed Person – 20% of his gross total income in the previous year
Note: For the purposes of this section, “salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites
2. Section 80CCD(1B) – Additional deduction over and above Section 80CCD(1)
This sub section is introduced by Finance Act, 2015. As per this sub-section the assessee i.e Salaried employee or Self-Employed person both can claim additional Rs 50,000/- as deduction which is over and above Rs. 150000 as available u/s 80C, 80CCC and 80CCD(1). This is also for the contribution made towards notified pension scheme.
3. Section 80CCD(2) – For Contribution made by Employer or Central Government
This section comes into play when the Central Government or any other employer makes any contribution to the account of an assessee referred in Section 80CCD(1). Now, how this deduction will work in Income Tax Return is little different as compared to other deductions.
To claim deduction u/s 80CCD(2), follow 2 steps:
i) First add that contribution in salary income
ii) and then claim deduction under Chapter VI-A, upto maximum of 10% of salary (Remember in case of Government employees it is 14%)
Here, we complete discussing the important part of Section 80CCD.
Impact of Finance Act, 2020 on Section 80CCD:
Now, heading towards the most crucial factor. As per Finance Act, 2020, Government introduced New Tax regime for Individuals i.e u/s 115BAC which have some concessional rate of taxation. But for taking the benefits of these concessional rates, the assessee has to forego the most of the deductions and exemptions available under the current regime.
Coming directly toward our concern point of today’s topic, if person opt for New Tax Regime he has to forgone the deductions u/c VI-A like 80C, 80D, 80E, 80G except 80CCD(2) and 80JJAA. This means they can claim deduction u/s 80CCD(2) irrespective of the fact that whether they are choosing old tax regime or new tax regime. Hence, this thing we all need to keep in mind at the time of filing of Income Tax return henceforth.
I hope this article is very fruitful for all of you.
(Republished with Amendments by Team Taxguru)
Author Bio
sir
We are central government employees and contribute NPS 10℅ as own share.
If employees contribute NPS 10℅ + other savings under 80 ccc, can we allowed 50000 under 80ccd1b, if both the contribution are 200000 and more?
Dear sir, in your article above, you have stated that deduction is available to an employee u/s 80CCD(2) on employer’s contribution subject to first adding that contribution in total income. Is it not factually incorrect? Because section 80CCD (2) deduction is available to an employer and not an individual/employee. Please clarify and issue corrigendum.
I am a government employee under old pension scheme .Can I avail additional exemption of Rs.50000/- u/s 80ccd,(1b) of NPS tier 1 account.
What is the purpose/meaning of deduction under 80ccd(2) if employer’s contribution is to be first added in the gross taxable salary and then the same amount is deducted from it???
Sir if investment under sec 80CCD(1B) is Rs.50000 and employer contribution under Sec 80CCD(2)is Rs.50000 then what would be the total deduction to be claimed under section 80CCD Rs. 50000 or 100000?
Please Reply
TIA
Sir,I have a query regarding Sec. 80CCD. Deduction under section 80ccd(2) and 80ccd(1B) can be claimed at once? For Instance; if investment under section 80ccd(1B) is Rs. 50000 and employer contribution under section 80ccd(2) is Rs.20000, then total deduction under 80ccd will be 50000 of 70000?
Please Reply.
TIA
I am working as a Assistant, My Gross Salary is 800000. my CPS deduction is 65000. I have invested Rs.100000 in Life Insurance Premium, and I have to pay Rupees 60000 as House Loan Principal and Rs 30000 as tuition fees to daughter. May I avail Rs 50000 dedction as NPS under Sec 80CCD(1b).
Dear Sir,
I am a Central Govt. employee, joined before 01.01.2004. Kindly inform me whether the deduction under section 80CCD(1B) is allowed only for TIER-1 contribution (or) Tier-2 contribution (or) for both. Thanks–SEKAR, CHENNAI-
E-MAIL: [email protected]
Deduction from employer happened on 30th March but the units got credited on 3rd April.
Which financial year my contribution will be counted. Any Income Tax section which justifies that.
Case 1. A employee has gross salary Rs. 12,00,000 and he invested LIC Rs 120,000 PPF 40,000 his contribution to NPS 10% is 1,00,000 . Can he claim a deduction u/s 80 ccd(1b) of Rs. 50,000. Total deduction Rs. 2,00,000
I am a Central Govt.employee having Old Pension Scheme under which I am getting tax benefit up Rs.150000 after deducting the sufficient amount in GPF.
Can I get extra tax benefit for an amount of Rs.50000 if I am opening a account in New Pension Scheme.
If so, what is the procedure for opening an account and where i.e. SBI etc. I can open the same.
Please reply, so i can get tax benefit before February 2017 salary.
in NPS can we clime Govt contribution for tax exemption
sir, i invested Rs 1,80,000 in LIC & HBA principle. my contribution in NPS Rs 50000
so, can i claim deduction of Rs 50,000 from this amount of Rs 50000 under section 80ccd(1b)? plz reply … Thank you
sir, i invested Rs 1,80,000 in LIC & HBA principle. my contribution in NPS Rs 84000
so, can i claim deduction of Rs 50,000 from this amount of Rs 84000 under section 80ccd(1b)? plz reply … Thank you
is old pension scheme govt employee eligible for joining nps and getting tax concession as per80ccd1b
Suppose a person has remitted Rs 2,00,000 in NPS. Will ge get Rs 1,50,000 deduction u/s 80C and Rs 50,000 under 80CCD. Total Rs 2,00,000
How to claim deduction under section 80CCD1 and 80CCD2. I got deduction approved for contribution under section section 80CCD1b and 80C. Please indicate what I have to do or how I have to contribute to claim 80CCD1 and 80CCD2 deductions.
Sir,
Ihave invested Rs. 1,50,000/- in the PPF. My contribution in NPS u/s ccd(1) is Rs.53000/-.Can I claim deduction of Rs.50,000/- from this amount of Rs.53000/-, u/s 80 ccd(1b)?. Please reply soon………. Thanks
i am state government employee. my nps deduction is 52000 and government deposit 52000 in nps(on salary 10%).Ican get additional benefit 50000 80ccd(1B)
I am state government employee. my nps deduction is 42074 and government deposit 42074 in nps(on salary 10%).Ican get additional benefit 50000 80ccd(1B)
80CCD IS NOT AVAILABLE IN THE MARKET. BANKS LIKE SBI, BOI,IDBI ARE NOT AWARE OF IT. WHAT TO DO? FROM WHERE SHOULD I DO MY INVESTMENT OF 50,000 IN 80CCD, ABOVE 150,000.PL REPLY.
In NPS is the amount of pension received only be the person in whose name the account is opened or can the pension be received by family or nominees in case of his/her death?
Dear Sir,
I am an employee of State Bank of India, I am investing an amount of Rs. 10000/ PA in LIC pension scheme from 1998. Whether such investment is applicable for 80CCD(1B) in FY 2015-16 or not
my wife is state government employee in rajasthan education department. I want to know that she is eligible for additional tax benefit on additional NPS of Rs.50000 or not?
She has taken employee contribution deduction u/s 80CCD(1) in limit of Rs.150000 & employer contribution deduction u/s 80CCD(2). She want to invest additional Rs.50000 in NPS to avail additional tax benefit of Rs.5000.
Kindly suggest it is advisable or not?