Income Tax Benefit Under NPS (Sections 80CCD(1),80CCD(2),80CCD(1B) 2019-20

Nps 2019

In order to take income tax benefit under NPS,you must have knowledge about sections 80CCD(1),80CCD(2),80CCD(1B).

As per new pension scheme (NPS) 2019,you can take income tax benefit under NPS as deduction of rs up to 2 lakhs under sections 80CCD(1),80CCD(2),80CCD(1B).

Section 80CCD(1)

Firstly,let us understand section 80CCD(1).

According to this section,any govt employee will have to contribute 10% of his/her basic pay+ D.A.

But the total of 80C-80CCD(1) must be = rs.150,000.

Section 80CCD(2)

THIS section will be available to central employees.

Where it is mentioned in their salary statement that, their employer’s contribution to NPS is made on the behalf of his employees.

Rs. 50,000  is available as tax deduction besides rs. 150,000.

Key features of section 80CCD(2)

  •  There is upper limit for this deduction.That is lease of these three:    1. Amount contributed by an employer.  2. 10% of Basic+DA (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). 3.  Gross Total Income.
  • Self employed are not eligible to take any deduction under 80ccd(2).

Tax Benefits U/s Section 80CCD(1B)

There is additional tax benefit upto  rs. 50,000 Under section 80CCD(1B).

How you can take tax benefits under 89ccd(1b)

Suppose your saving under section 80c are of rs. 150,000.

And you have also contributed rs. 50,000 to NPS (10% of basic+DA)

Now you will get rs. 50,000 additional tax benefit.

So you will take rs. 150,000 deduction under combination of sections 80C-80ccd(1).

And you should put rs. 50,000 in 80CCD(1B).

Thus you have taken total 2 lakhs of tax deduction.


It is clear that you can take  tax benefit under Section 80CCD (1)+Section 80CCD (1B) up to Rs.2 lakhs.

Along with that, you have another additional option to claim deduction under Sec.80CCD (2),

which is unlimited and based on the three conditions discussed under section 80ccd(1) above.


Also read:

Income tax benefit on personal loan 2019-20

Kuldeep Singh

is a professional blogger,teacher and income tax expert

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