Section 80 CCD: Deduction for NPS Contribution |Chapter-A of the Income-tax Act provides for various exemptions for contributions to pension schemes. These exemptions are available under Section 80C, Section 80CCC, and Section 80CCD and can be claimed at the time of filing an income tax return. This article focuses primarily on exemptions approved under Section 80 CCD. For exemptions under Section 80C and Section 80CC. 

Deduction under 80 CCD

There is a provision of 80 CCD for exemption of income tax for contributions to the National Pension Scheme (NPS) and for contributions to the notified pension scheme. Discounts under this section are available to individuals only and not to HUFs. Individual claims under this section may be residential or non-residential.

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Section 80 CCD (1): Grant of NPS Scheme for Contribution by Individual

Exemption under Section 80CCD (1) is not only available to salaried persons; salaried persons can also contribute to the NPS scheme and get relief for the same.

The maximum amount allowed as exemption under Section 80CCD (1) is: -

 

In case of employees: 10% of his salary for the financial year (salary includes value-added allowance but excludes all other allowances and permits)

In case of non-employees: 10% of total income in F..Y (increased from F.Y 2017 to 20%)

 

Section 80 CCD 2015 Budget Amendment

Earlier, the amount of exemption allowed for contributions to NPS was limited to Rs 1 lakh [Section 80 CCD Sub-section 1A]. However, to encourage people to contribute to the NPS, the maximum amount allowed to be invested in the National Pension Scheme has been increased from Rs 1 lakh to Rs. 1.5 lakh.

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In addition, a new sub-section 1 B has been introduced in the budget 2015 announced by Arun Jaitley to provide additional discounts for any amount payable, for which Rs. 50,000 50,000 for contributions by any individual assessors under NPS. 

This is an additional advantage. Benefits above Rs 50,000 and above. A rebate of Rs 1.5 lakh can be claimed under Section 80C. Therefore, it can now be claimed under Section 80C + Section 80CCD that the total exemption. 2 lakh rupees.

 

Section 80 CCD (2): Deduction on NPS scheme for contribution by employer

If an employer contributes to the NPS scheme on behalf of the employee and is availed by the employee, the amount under which the employer contributes by the employee may also be waived under section 80CCD (2).

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The contribution made by the employee himself in the NPS scheme will be allowed as a discount under section 80 CCD (1) and the contribution made by the employer in the NPS scheme will be approved as a discount under section 80CCD (2).

 

The concession approved under section 80CCD (2) will be allowed for the contribution of employers up to 10% of the salary of the individual.

 

Receives tax refunds on money from the National Pension Scheme

The contribution made by the NPS scheme will be returned to the employee as a pension after retirement or by surrendering the policy (as it may be).

 

At the time of withdrawal from the NPS account, 60% of the accumulated balance can be withdrawn and he will be exempted from tax. An annuity will be purchased from the balance of 40% amount.

 

Budget 2017 Update: Exemption will also, be allowed for partial withdrawal without exceeding 25% of the  contribution made by the employee under certain conditions under the Pension Fund Control and Development Authority Act.

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On June 04, 2021 by www.taxexcel.net

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Section 80 CCD

 

Discounts on contributions to the central government's pension scheme- Bare Act 

(1) Where an assessor, on or after the first day of January 2004, as a person appointed by the Central Government or any other employer, or as appointed by any other assessor, paid as a person in the previous year or informed by the Central Government or under the pension scheme. Any amount deposited in the account shall be allowed to be deducted from the calculation of his total income in accordance with the provisions of this section and subject to it, in excess of the total amount paid or deposited, 

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In the case of an employee, 10% of his previous year's salary; And

In any other case, 20% of the total income of the previous year

Any assessor referred to in sub-section (1) shall be allowed to make concessions in the calculation of his total income is there any concession allowed under sub-section (1) of the given amount? Or maybe informed under the pension scheme deposited in his account in the previous year or by the Central Government, not exceeding fifty thousand rupees:

 

Provided that no concession under this subsection shall be granted without consent in the amount of concession claimed and granted under sub-section (1).

(2) Where in the case of an assessor referred to in sub-section (1), the Central Government or any other employer contributes to his account referred to in that subsection, the assessor may be allowed to deduct his total income, the Central Government or any other employer that Amount means [not exceeded] the full amount of the amount is given by him

 

14%, where the central government makes such a contribution;

Ten per cent, where such a contribution is made by another employer in his previous salary]

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(3) Any accountant referred to in sub-section (1) or sub-section (1b) has stood for the credit of the person designated in his account, in which case a waiver has been allowed under sub-section or sub-section (2) And with the money collected, if any, by the appraiser or his nominee, in whole or in part, in any previous year,

Due to termination or adoption of the pension scheme referred to in sub-section (1) or sub-section (1b); Or

 

Since the pension was taken from the anniversary plan or has been discontinued or chosen,

The full amount of the amount referred to in section (a) or section (b) shall be treated as the income of the assessor or his nominee, as may be, the amount received in the previous year, and shall be taxed according to the previous year's income accordingly

 

Provided that in the circumstances mentioned under condition (a), the amount received by the nominee after the death of the appraiser shall not be treated as the nominee's income.

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(4) Where any money paid or deposited by the appraiser has been approved as a waiver under subsection (1) or sub-section (1B),

 

No waiver shall be allowed with such amount in Article 88 for any assessment year ending before the first day of April 2006;

 

No deduction will be allowed under section 80 for any assessment year beginning on or after the first day of April with such an amount,

 

(5) For the purposes of this section, if this amount is used by the appraiser to purchase an anniversary plan in the previous year, it shall be deemed that no money has been collect in the previous year.

 

Note: Salary includes value-added allowance, excluding all other allowances and permits if conditions of employment are provided.

 

Note: The Central Government has notified Atal Pension Yojana as a pension scheme, the contribution of which will be eligible for exemption under 80ccd.

 

80 CCD Division Crew (1B)

 

80. Whether or not a person claims a waiver under CCD (1), Rs. 50,000 approved.

 

Note: The aggregate discount of 80 CCD (1) and 80 CCD (1b) shall not exceed the actual amount deposited or paid in the previous year.

 

Note: The amount of 80 CCD(1B) will not be considered during the calculation of the total limit of Rs.1,50,000 as described in section 80cc.

 

80 CCD Division Course (2)

Applicability

This sub-section is applicable if the employer contributes to the pension fund informed by the Central Government.

Maximum limit

1. If contributed by the Central Government as the employer

Limit 14% of salary

 

2. If covered by another employer

Restricted if covered by another employer 

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On April 19, 2021 by www.taxexcel.net

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