Section 80CCD:Benefits Of National Pension Scheme Contribution

Section 80CCD deals with those emoyees or taxpayers who are subscribers in NPS(New Pension Scheme).

80CCD section is splitted into three sections:

Section 80CCD(1),80CCD(2) And  80CCD(1b).

Section 80CCD(1): 

All the employees who had joined service on or after 1st april 2004 come strictly under NPS in general and  80CCD(1) Section particular.

Further all these employee will deposit 10% of their Basic+DA in NPS account under Section 80CCD(1).Which is compulsory.

Section 80CCD(2):

In some of the departments in INDIA,Employers or DDO(DRAWING AND DISBURSING OFFICERS) contribute 10% of their salary (basic+DA) ON behalf of his/her employees.

Thus in this case you can take tax benefit u/s 80CCD(2)

Section 80CCD(1b):

This section mainly let you take additional tax benefit of rs 50000 while meeting some conditions that we will discuss in the later part of this article.

EXAMPLE-1

Suppose you have Gross income rs 600000.And you saving u/s 80C of rs 130,000.

Now suppose your CPF amount of rs 60,000 per annum goes to NPS.

So in this case you can split rs 60,000 into two parts:rs 50,000 and rs 10,000.

Now as your saving u/s 80C is still less than 150,000.In such a case you NPS (CPF) amount of rs 50,000 should go to 80CCD(1b) and rs 10,000 will come in 80CCD(1) section.

It means you can only take additional tax benefit of rs 50,000 if you have already taken full saving tax deduction of 150,000 under section 80C.

So overall rs 2 lakhs tax benefit  is available under sections 80C,80CCD(1) and 80CCD(1b),if you know it how to do.

EXAMPLE-2

Suppose you Gross income is 6 lakhs.And your saving under section 80C (PPF,TUITION FEE,PPF ETC) IS 1.5 LAKHS.

ALSO let your contribution to NPS is 70,000.In this case you can only take aditional rebate of  rs 50,000 u/s 80CCD(1b).

So rs 20,000 out of 70,000 will go wasted here.

Conclusion:

Finally we can analyse that tax payers can avail 2 lakh amount benefit provided he/her avail full 150,000 saving under 80C and get rs 50,000 aditional tax benefit.

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

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