Thursday, June 7, 2018

Income Tax Deduction u/s 80CCD

Friends,   The employees who are appointed after 01.01.2006 are falling under NPS Scheme.   The special deduction has been provided for them under section 80CCD.    There are three type of deductions under 80CCD.

1. 80CCD (1)   for employee contribution
2. 80CCD (2)   for employer contribution
3. 80CCD (Ib)  for getting Extra Benefit in Income Tax.
Above deductions are detailed given below for easy use of stake holder :-

Section 80CCD: Deduction for Contribution to Pension Account

Employee’s contribution – Section 80CCD (1) is allowed to an individual who makes deposits to his/her pension account. Maximum deduction allowed is 10% of salary (in case the taxpayer is an employee) or 20% of gross total income (in case the taxpayer being self-employed) or Rs 1, 50,000, whichever is less.
FY 2016-17 and earlier years – In the case of a self-employed individual, maximum deduction allowed is 10% of gross total income.
However, the combined maximum limit for section 80C, 80CCC, and 80CCD (1) deduction is Rs 1, 50,000, which can be availed.
Deduction for self-contribution to NPS – section 80CCD (1B) A new section 80CCD (1B) has been introduced for an additional deduction of up to Rs 50,000 for the amount deposited by a taxpayer to their NPS account. Contributions to Atal Pension Yojana are also eligible.
Employer’s contribution to NPS – Section 80CCD (2) Additional deduction is allowed for employer’s contribution to employee’s pension account of up to 10% of the salary of the employee. There is no monetary ceiling on this deduction.

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