Additional Income Tax Deduction U/S Section 80CCD(1B) FY 2019-20

Section 80CCD(1B)Tax payers who comes under NPS,can get additional income tax deduction of rs. 50,000 under section 80CCD(1B).

If you are a govt. Employee and an NPS subscriber,then 10% of your basic pay and DA goes directly to national pension scheme account in terms of PRAN no.

If you are a salaried individual and have already exhausted the  1.5 lakhs in  Section 80C,

Then  you can definitely take additional tax saving of up to 50,000 in the National Pension Scheme.

Hence,all salaried or self-employed, qualifies for an extra tax deduction under Section 80CCD (1B) of the Income Tax Act.

One thing to remember here that,this deduction is in addition to the  1.5 lakh allowed under Section 80C.

Another point to remember ; only Tier 1 accounts of the NPS are eligible for the additional 50,000 deduction under Section 80CCD (1B).

Tier 2 NPS investments do not qualify for Section 80CCD (1B).

Example to take additional tax Benefit u/s 80CCD(1B)

Suppose, you have made investments of Rs. 1,50,000/- under Section 80C.

Also you have  contributed Rs. 80,000/- per annum towards the NPS.

You can now claim a deduction of Rs. 2.00 Lakhs, i.e. Rs. 1.50 Lakhs under Sec 80C and Rs. 50,000/- under Section 80CCD(1B).


Finally,it is clear that under new pension scheme,tax payer can take an additional tax deduction of rs. 50,000 in addition to 1.50 lakhs under sections 80C,80CCE & 80CCD(1).

Thus you can reduce your tax liability.

Kuldeep Singh

is a professional blogger,teacher and income tax expert

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