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