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
Good evening sir,
I am a teacher in rajasthan state.how can I gain additional tax rebate under clause 80ccd(1b)?क्या पूर्व nps no.से ही कटौती हो सकती हैं।
My daughter working in a private sector company does contribute her share of 10% of her salary income of 12.00 lac [along with 10% contribution by her employer] to the NPS.
Kindly clarify whether she is further entitled to get her individual voluntary [ tier-II] NPS account opened to deposit therein as well up to Rs 50,000/-PM in NPS ?
If so,would then she be entitled to this Rs 50,000/- additional tax deduction benefit outside the overall ambit of 1.50 lac under section : 80-C or not?
Sir,
I am an individual. Serving in a University in Gr-A level. I am under NPS scheme. I have contributed Rs.92000/-+ towards NPS in the current FY: 2015-16 and maximum rebate is 1,50,000/- in 80C. How can I save another 50,000 under section 80CCD(1B). Whether I have to contribute more from my salary or to open a separate account? Or excess amount beyond Rs.1,50,000/- under 80C will be adjusted under 80CCD(1B).
kindly advise.
Sir, i am punjab govt employee and covered under pension scheme and also contributing gpf from salary. Can i open nps account for taking rebate under 80ccd(1b) of Rs50000/-
If I can invent under section 80CCD(1B). I want to know the locking period / maturity period of this investment.
R/sir
I m central govt. employee and comes under NPS. The annual contribution in NPS is 55000/_
for FY 2015_16. Can I avail 50000 deduction under section 80CCD(1B) for self contribution so that i can use section 80C limit of 150000 for other savings.
Is it compusary to use section 80C (80 CCD(1)) for deducting whole self contribution in NPS?
Pl help.
I am working in a PSU. My 80C limit of Rs. 1.5 L is already exhausted by PF, LIC contribution. Can I just invest Rs. 50,000/- in NPS and claim the same deduction under 80 CCD(1)b. My Employer not contribute any amount towards NPS u/s. 80CD(2).
My name is Karamvir Singh. I am an employee of Punjab State Power Corporation Limited. My query is regarding deductions u/s 80CCD. The query pertains to F.Y. 2015-16 and A.Y. 2016-17. The following are the tentative Income and savings detail for the A.Y. 2016-17:
1. Gross Income: 11,00,000/-
2. Savings:
a) PPF: 1,50,000/-
b) NPS (own share): 82,400/- (within 10% limit of total salary)
c) NPS (employer share): 82,400/- (within 10% limit of total salary)
I want to claim deductions as per the following details:
1. u/s 80C: 1,50,000/-
2. u/s 80CCD(1B): 50,000/- (from the amount invested in NPS, own share)
3. u/s 80CCD(2): 82400/-
4. Total deduction: 2,82,400/-
So, the taxable income remains = 8,17,600/-.
Are my calculations correct? Am I correct in claiming the deductions as per the details given by me?
Please clarify.
Karamvir Singh
dear sir, i regularly using your this website for getting good advises for income tax related ,, sir here by i m requesting u to guide me in this regard.
sir since 2013 i m working as a pgt in the scale of 9300-4800-34800.. and regularly completed d slab of 150,000 Rs. but in last three years never paid NPS contribution per month because of not having PRAN no.i got d same no. i last JANUARY2015 and thereupon i m deducting arrear of last near about 26 installments as per month three old arrear and regular one in this way i paid 98000 Rs. as an arrear and near about 49000 Rs as a per regular month installments which total costs 128,000Rs. now i want to know how to claim for saving of above arrear for d year 150000 Rs. slab .. please hep me
i m a State University employee covered under old pension scheme. My gross income is aprox. 6.00 lac. my annual savings are Rs. 1,50,000/-. Plz. suggest me, Can i open NPS account for the purpose of savings/tax benefits over and above Rs. 1,50,000/-?
The latter (i.e. 1.5L in PPF/VPF/etc. + 0.5L in NPS = Total 2L)
The employer's contribution to an individual's NPS account is always included in gross income of employees. While calculating the tax the whole amount gets deducted under 80 CCD(2) hence gets exempt from tax.
This additional 50000/- is over & above 1,50,000/- of 80 CCE (i.e. 80C, 80CCC, 80CCD(1) etc) (excluding 80 CCD(2) i.e. employer's contribution). But to avail this benefit, who is eligible, where and how to invest is the question. It seems that only employees covered under NPS are eligible and not the employees covered by old pension scheme.
Sir,
Query regarding 80 CCD(1B) : I am a Govt Employee and the dept will deduct approx 40000/- from my salary in FY 2015-16 towards my NPS account covered under 80CCD(1), and an equal contribution (approx 40000/-) will be made by the Dept covered under 80 CCD (2) for purpose of Income Tax. Now, to avail benefit of newly introduced 80 CCD(1B), what I need to do? where, how and how much I have to invest to get extra benefit of 50000/- under 80 CCD(1B). Let me also clarify that there is no provision from Dept side regarding deduction for claiming benefit under 80 CCD(1B)
Also, are the employees covered under NPS (Post 1/1/2004)only eligible for benefit of 80 CCD(1B) or the employees covered under old Pension Scheme of Govt too can avail this benefit as tax benefit under 80 CCD(1) and 80 CCD(2) are also available to employees under NPS only and not old pension scheme employees.?
Sir,
Query regarding 80 CCD(1B) : I am a Govt Employee and the dept will deduct approx 40000/- from my salary in FY 2015-16 towards my NPS account covered under 80CCD(1), and an equal contribution (approx 40000/-) will be made by the Dept covered under 80 CCD (2) for purpose of Income Tax. Now, to avail benefit of newly introduced 80 CCD(1B), what I need to do? where, how and how much I have to invest to get extra benefit of 50000/- under 80 CCD(1B). Let me also clarify that there is no provision from Dept side regarding deduction for claiming benefit under 80 CCD(1B)
I am working in PSU. Whether 2% pension+EPF(Double Cont)+Addl Inc is entitled to deduction u/s 80CCD(1B)?
sir where i can invest for 80ccd1 please send detail of bank tahank
Sir,
Went through this mail thread. I still have confusion in interpretation:
is it the case: if you invest Rs 150000/- alone towards NPS, only then excess amount of Rs 50000 benefit can be availed under 80ccd1.
or the case is- I contribute 150000/- towards PPF/Pension etc, and now I can put 50000 in NPS under 80ccd1 to get full tax benefit on 20000/-?
Regards,Ashok
I work in a PSU. My 80C limit of Rs. 1.5 L is already exhausted by PF, LIC contribution. Can I just invest Rs. 50,000/- in NPS and claim the same deduction under 80 CCD(1)b. One interpretation is that I have to invest Rs. 50,000/- over and above of 10% of my salary in NPS to claim deduction of Rs. 50,000/- under 80 CCD(1)b irrespective of my savings in PF, LIC. Please clarify.
Regards
SIR,iam a GOVT employee ,RS.4000/- deducting every month from my salary,i.e 48000/- per year,. i have 1,50,000/- rupees PLI & LIC. MY doubt is , am i eligible to get 2 lax saving benifit( 150000 Lic+50000 cps) please clarify
Sir,
My LIC savings & PLI Savings upto Rs.1,03,770/-. CPS contribution is Rs.45,000/- approximately. APGLI R.5400/-. Gross is Rs.5,70,000/- approximately for the Year 2015-16. How can I save additional saving of Rs.50,000/-.
Dear Sir,
Total 80 C limit which increase from 1,50,000/- to 2,00,000/- in AY 2016-17 which include 50,000/- of NPA (ie.80 CCD) or it will be 2,00,000/- + 50,000/-.
Please Explain.
I am a banker with a PSU Bank. I have opened PRAN a/c for NPS & deposited Rs.7 lacs (3.5 lacs as employee contribution & 3.5 lacs as employer contribution ) in the a/c during FY 14-15 (along with arrears since 2009). In the form 16, contribution of FY14-15 only mentioned (Rs.70000/- each)How will be effect of arrears contribution for IT filing? Plz help..
Hi,
The Query Is Regarding Tax Planning Using NPS.
As NPS Contribution (Upto 10% Of Basic + DA) By Employer Is Not Included In Taxable Income Of Employee, Are There Any Companies Who Are Planning Such Sort Of Tax Planning Where NPS Contribution By Employer Is Made Part Of Employees Salary (I.E. It Is Made A Part Of CTC) . Any Special Conditions For Such Practice (Like Board Approval, Special Resolution, Revision Of Employees Compensation Letters Etc)
Please Share The List Of Big Corporates, MNC’s & PSU’s Following Such Practice.
i m a govt servant. 10% of salary i. basic pay+da is deducted as contrubution to nps which amounts to rs. 40000 p.a which is allowed as deductible under 80c now i want to know how can i avail the further deduction of rs. 50000 as mentioned in the current budget. for this have i to deposit a separate amount of rs. 50000 in my nps account also how can i deposit this amount to my nps account as i get salary only after deduction by govt.
If i am already investing 1.5 lakh of 80C for Life Insurance, Child education, Housing EMI Principal and there is 10% of my basic salary i.e. Rs 3000×12=36000 is further deducted from my salary and deposited into my NPS account as part of Employee contribution per 80CCD(1). Shall i be able to get the tax deduction of this Rs 36000 after exhausting Rs 1.5 lakh of 80C???
Dear Sir
a confirmation required as per the below data:
I have a pension plan from XYZ Life insurance company of annual premium 200000. my salary is 15 Lakhs per anum.
so, as per new 80 CCD rule, can i get income tax benefit for the whole amount of deduction?
or, do i have to purchase NPS of 50000 per anum and 1 lakh of previous insurance pension plan that i have will get tax benefit?
NPS UNDER SECTION 80 CCD IS NOT AVAILABLE IN MARKET NEITHER IN SBI. PL GUIDE US FOR THE RIGHT PLACE OF APPLICATION. REGARDS
Please let us know as per the budget declaration is the contribution of Rs.50000/- to Pension scheme is over and above the Rs. 1.5 Lakh limit available under Sec.80.
what are the elligible sceheme notified by the Govt. for investment as on date.
i want to know that what is additional deduction?
When we are saying NPS contribution; kindly clarify Tier 1 account or Tier 2 NPS account.
Hi,
My companies payroll department is not extending 80ccd 1B benefit to us right now as they say that the relevant circular has’nt got released.
Pls. can you share the relevant circular which is giving this additional 50k NPS deduction as benefit.
Regards,
Rajesh
I work in a PSU Bank. My NPS is deducted @10%(Basic plus DA)(Appx Rs50000 pa). I am planning to deposit Rs 1.5 lacs in PPF. Can I claim Rs 50000 NPS deducted by the employer under 80CCD(1B) and Rs 1.5lacs PPF under 80C??
Is 80ccd of additonal rs. 50000 can we declare to company working apart from 80c, or do we have to show the income made under sec 80ccd at the filing of IT return.
I am govt employee i have deduction of 80c is Rs. 15000, get me addition deduction Rs 50000 of 80ccd
. In such total deduction u/s 80C, 80CCC, 80CCD(1) upto 2 lacs. – pls clarify the total limit is currect
I am a central govt employee eligible for govt pension (joined in 90s). is the tax deduction u/s 80 CCD available to me also?
Clear explanation below:
80C = upto 1, 50,000
80CCD(1) = (2,00,000 – 80C)
So 80C = EPF + VPF + PPF + 5-year FD = upto 1,50,000 allowed
pUT JUST 50000 IN 80CCD(1) to reach 2,00,000
Thank you very much for the detailed explanation
Thank you very much
HI,
Appreciate the detailed notes, Can you help to understand the additional deduction available u/s80CCD (1B).
Do the assessee needs to invest Rs.2 lakh to get the additional benefit, or the additional benefit can be availed with 1.5 lakh investment in any other fund eg.PPF) and 50K in NPS.
I a central govt employee, & going to retire in 2020. Am i eligible for this section 80CCD (IB)of NPS. Kindly explain me how can i avail this benifit & from where?
I am 60 yrs. old and retired from the service. How can I invest additional Rs. 50,000/= u/s 80CCD(1B) in NPS while I have neither NPS account nor one can open NPS account over 55 yrs. of age as per rules of NPS.
sir,
my insurance premuim and pf contribution covers Rs 150,000/-for 80 c deduction whether i can get another rs 50,000/- deduction if i contribute to NPS i,e total Rs 2,00,000/deduction
So from FY 2015-16 or AY 2016-17 if an individual has already contributed and availed deduction in FY 2014-15 or before up to 1 lac in NPS ( being 10% of basic and DA) continues with same amount then he will be allowed deduction for the same u/s 80CCD(1) where 80C and 80CCC instruments also compete for overall 1.5 lac limit under 80CCE. If same individual contributes additional amount upto 50000 due to rise in Basic and DA, i.e. over and above what he contributed last fiscal or voluntarily increases his contribution, he is entitled for additional deduction upto 50000. In such a case he may end up in availing total deduction u/s 80C, 80CCC, 80CCD(1) upto 2 lacs.
So from FY 2015-16 or AY 2016-17 if an individual has already contributed and availed deduction in FY 2014-15 or before up to 1 lac in NPS ( being 10% of basic and DA) continues with same amount then he will be allowed deduction for the same u/s 80CCD(1) where 80C and 80CCC instruments also compete for overall 1.5 lac limit under 80CCE. If same individual contributes additional amount upto 50000 due to rise in Basic and DA, i.e. over and above what he contributed last fiscal or voluntarily increases his contribution, he is entitled for additional deduction upto 50000. In such a case he may end up in availing total deduction u/s 80C, 80CCC,
I am working as a teacher, my CPS deduction is 65000. I am going to invest Rs.64000 in Life Insurance Premium, and I have to pay Rupees 45000 as House Loan Principal and Rs 30000 as tution fees to daughter. How much is the tax deduction for me?
Sir,this is Mahendar, from telangana state. Iam a teacher, My cps deduction is 38775 and the govt contribution is 39150 how can i show deductions price and saving price.please answer me. Thankvyou sir.
If A have a gross salary of 7 laks and NPS deduction 10+10% i. e.140000 contributed and exemption same towards 80CCD but now in budget limit 50000+50000 or additional 50000 please clear? Again it is applied next year 2015-16?
afterall, our choice of investment in RGELSS is no more available.