Section 80CCD of the Income Tax Act, 1961 is a provision that provides tax benefits for contributions made towards the National Pension System (NPS) and Atal Pension Yojana (APY). It allows individuals to claim deductions on their contributions to these pension schemes. Here are some key points about Section 80CCD:
- NPS and APY Contributions: Section 80CCD covers contributions made by individuals to the National Pension System (NPS) and Atal Pension Yojana (APY). NPS is a voluntary pension scheme available to individuals, including salaried employees, self-employed individuals, and others. APY is a pension scheme targeted towards unorganized sector workers.
- Deduction Limits: The deduction under Section 80CCD is subject to certain limits:
- NPS Employee Contribution (Section 80CCD(1)): Individuals who are employees and contribute to their NPS account can claim a deduction of up to 10% of their salary (for employees) or 20% of their gross total income (for self-employed individuals) under Section 80CCD(1). This deduction is within the overall limit of Section 80C.
- NPS Employer Contribution (Section 80CCD(2)): Employees can also claim an additional deduction on the amount contributed by their employer to their NPS account. The deduction under Section 80CCD(2) is limited to 14% in case employer is central Government or state government and 10% in case of other employers, of the employee’s salary (excluding allowances) for the financial year.
- NPS Voluntary Contribution (Section 80CCD(1B)): Individuals can make voluntary contributions to their NPS account, over and above the mandatory contributions. They can claim an additional deduction of up to Rs. 50,000 under Section 80CCD(1B) in addition to the deductions mentioned above.T
- Filing of Income Tax Return: To claim the deductions under Section 80CCD, individuals need to provide the necessary details of their NPS or APY contributions while filing their income tax return. These deductions will be considered while computing the taxable income.
It’s important to note that the cumulative deduction under Sections 80C, 80CCC (for contributions to pension plans), and 80CCD (for NPS and APY contributions) cannot exceed Rs. 1.5 lakh in a financial year.
Practical Course at:
Section 80C save 1.5lakh &
80CCD Rs 50thousand save
All total 2lakh save or not