There are many conflicting views and comments in various Web Site that on the budget 2015 A certain section – 80 CCD (1) – has been amended, clarifying that it is available to private & Govt. sector employees as well.
As per the Finance Bill for the Financial Year 2014-15 was fixed in the section 80CCD(1) Rs. 1 Lakh and the Total deduction U/s 80C was fixed Rs. 1.5 Lakh. But the deduction made in the section of 80CCD(1) was fixed Rs. 1 Lakh. Below given the Caption of Finance Bill 2014-15 about this 80CCD(1) Sub Section (1)
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THE FINANCE (No. 2) BILL, 2014
28. In section 80CCD of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2015,––
(i) for the words, figures and letters “Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004”, the words, figures and letters “Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004 or, being an individual employed by any other employer” shall be substituted;
(ii) after sub-section (1), the following sub-section shall be inserted, namely:––
“(1A) The amount of deduction under sub-section (1) shall not exceed one hundred thousand rupees.”. i.e. RS.1.5 LAKH.
29. In section 80CCE of the Income-tax Act, for the words “one lakh rupees”, the words “one hundred and fifty thousand rupees” shall be substituted with effect from the 1st day of April, 2015.
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80CCE The aggregate amount of deductions under section 80C, section 80CCC and sub-section (1) of section 80CCD shall not, in any case, exceed 1.5 lakh rupees, But the Section 80CCD(1) WHICH IS FIXED Rs.1 Lakh.
As per the finance bill 2014-15 changes the 80C, and 80CCE limit to Rs. 150,000. But it also changes the 80 CCD section like this:
28. In section 80CCD of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2015,––
(i) for the words, figures and letters “Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004”, the words, figures and letters “Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004 or, being an individual employed by any other employer”
shall be substituted;
(ii) after sub-section (1), the following sub-section shall be inserted, namely:––
“(1A) The amount of deduction under sub-section (1) shall not exceed one hundred thousand rupees.”.
(i) for the words, figures and letters “Where an assessee, being an individual employed by the Central Government or any other employer on or after the 1st day of January, 2004”, the words, figures and letters “Where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004 or, being an individual employed by any other employer”
shall be substituted;
(ii) after sub-section (1), the following sub-section shall be inserted, namely:––
“(1A) The amount of deduction under sub-section (1) shall not exceed one hundred thousand rupees.”.
The first part basically clarifies that you can be employed anywhere. (In fact you can even be self employed, because the “or any other individual” continues to stay).
The second part is critical. It says that amount YOU contribute (which is what is subsection(1) is) is only deductible up to Rs. 1,00,000/-.
Clearly:
· There is no ADDITIONAL investment deduction under 80CCD for your own contribution.
· This deduction, remains locked for your own NPS contributions upto Rs. 100,000 only.
· If you invest that, then you get another 50,000 deduction for investing other 80C type assets
· If you don’t invest in NPS, you still get the 150,000 to invest in 80C type of assets
And NPS is Taxed on Exit
NPS contributions may be exempt, but they are one instrument where exits are taxed. Whatever money you received – whether as a lumpsum or a pension – is added to your income and taxed accordingly.
Now the Section 80CCD(1A) has omitted by the Finance Bill 2015-16 and amended this Sub Section substitute in 80CCD(1B) AND Raised the amount from Rs. 1 Lakh to 1.5 Lakh including the additional benefits Rs.50 thousand in this new section 80CCD(1B). Below given the what is said by the Finance Bill 2015-16 about this 80CCD and Additional Rs. 50 Thousand. Lets see.
THE FINANCE BILL, 2015
16. In section 80CCC of the Income-tax Act, in sub-section (1), for the words “one lakh rupees”, the words “one hundred and fifty thousand rupees” shall be substituted with effect from the 1st day of April, 2016.
17. In section 80CCD of the Income-tax Act, with effect from the 1st day of April, 2016,-—(a) sub-section (1A) shall be omitted; (b) after sub-section (1A), as so omitted the following sub-section shall be inserted, namely:—
“(1B) An assesse referred to in sub-section (1), shall be allowed a deduction in computation of his total income, [in addition to the deduction allowed under sub-section (1)], of the whole of the amount paid or deposited in the previous year in his account under a pension scheme notified or as may be notified by the Central Government, which shall not exceed fifty thousand rupees:
Provided that no deduction under this sub-section shall be allowed in respect of the amount on which a deduction has been claimed and allowed under sub-section
(1);(c) in sub-section (3),—(I) for the words, brackets and figure, “sub-section (1)”,wherever they occur, the words, brackets, figures and letter “sub-section (1) or sub-section (1B)” shall be substituted;(II) for the words “under that sub-section”, the words “under those sub-sections” shall be substituted;
(d) in sub-section (4), for the words, brackets and figure, “sub-section (1)”, the words, brackets, figures and letter “sub-section (1) or sub-section (1B)” shall be substituted.
However it is clear that no additional amount i.e. Rs. 50 thousand can be claimed as extra benefits in this section 80CCD(1B) OR (1A). The Conclusion is given below as per the new Finance Bill 2015.
As per the Financial Year 2014-15 the Section 80CCD(1) was fixed Rs. 1 Lakh under the section 80C where can get the total deduction Rs. 1.5 Lakh, BUT THE SECTION 80CCD(1) WAS FIXEX IN Rs.1 Lakh.
As per the Financial Year 2015-16 the section has made chances and rename the Section 80CCD(1A) Substituted by 80CCD(1B) & get additional benefits Rs. 50 thousand in the Section 80CCD(1B) including the previous year’s deduction Rs.1 Lakh. So the Total Deduction will be Rs. 1.5 Lakh not Rs. 2 Lakh, As the Section 80CCE restricted the total amount of U/s 80C,80CCC & 80CCD(1B) Rs. 1.5 Lakh.
