There is so much confusion about NPS Tax Benefits after the 2016 Budget. Hence, in this post let us discuss about NPS Tax Benefits under sections 80CCD(1), 80CCD(2) and 80CCD(1B) and how to claim additional tax benefits.
Note:-There are certain changes in NPS Tax Benefits recently. I have explained the full such changes in my new post “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.
We know that everybody discuss NPS tax benefits during investment. But hardly few know about the taxation part when you start to withdraw. If you know the taxation issue while your retirement, then surely you stay away from NPS investment.
Hence, in this post, I will try to explain the tax benefits during investing and also at the time of retirement.
NPS Tax Benefits while investing
First, let us understand the NPS tax benefits while investing. I tried to explain the same from below image. Remember that all tax benefits while investing is only for Tier 1 NPS account (Refer the post related to difference between Tier 1 and Tier 2 of NPS at “Difference between Tier 1 and Tier 2 Account in NPS“. There is no tax benefit for the investment you do in Tier 2 NPS account.
Let us discuss one by one as below.
NPS Tax Benefits under Sec.80CCD (1)
- The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).
- An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employee’s (10% of Basic+DA) contribution will be eligible for deduction.
- As I said above, this section will form the part of Sec.80C limit.
NPS Tax Benefits under Sec.80CCD (2)
- There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA and 3) Gross Total Income.
- This is additional deduction which will not form the part of Sec.80C limit.
- The deduction under this section will not be eligible for self-employed.
NPS Tax Benefits under Sec.80CCD (1B)
- This is the additional tax benefit of up to Rs.50,000 eligible for income tax deduction and was introduced in the Budger 2015
- Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.
- Both self-employed and employees are eligible for availing this deduction.
- This is over and above Sec.80CCD (1).
How much maximum NPS Tax Benefits available while investing?
For Self-Employed
The maximum benefit you can avail under Sec.80CCD (1) is Rs.1,50,000 (including Sec.80C limit). Along with this Rs.50,000 under Sec.80CCD (1B). So total maximum benefit an individual can avail is Rs.2 lakh (where Rs.1.5 lakh will be part of Sec.80C limit).
Even though on paper it looks like maximum benefit available will be Rs.2 lakh. But under Sec.80C, you will have lot of choices and few default options to save (like life insurance premium or PPF). Hence, never be in wrong belief that NPS will ALONE gives you Rs.2 lakh tax benefit.
For salaried
You can avail the tax benefit under Sec.80CCD (1)+Sec.80CCD (1B) up to Rs.2 lakh. Along with that you have another additional option to claim deduction under Sec.80CCD (2), which is unlimited and based on certain conditions. I explained the same in my above post.
NPS taxation while withdrawing or maturity
Long back, I wrote a complete blog post on new NPS withdrawal and maturity rules. However, when it comes to taxation, there is a need for some clarification. Reasons are as below.
NPS Taxation on retirement
Let us say you accumulated Rs.100 at retirement. In that, you are eligible to withdraw Rs.60 or 60% of such accumulated corpus. Remaining Rs.40 or 40% need to be purchased an annuity product.
In the lump sum withdrawal of Rs.60 or 60%, Rs.40 or 40% is tax-free. Remaining Rs.20 or 20% is taxable income in the year of withdrawal.
The income from an annuity will be taxed year on year as per your tax slab. So you are deferring the tax treatment for future years from the 40% annuity you will buy.
Note-As per Budget 2017, the subscriber whose NPS account is at least 10 years old will be eligible for withdrawing 25% of his/her contributions (without accrued income earned thereon). This 25% withdrawal will be part of total 40% withdrawal (which is tax-free).
NPS Taxation on Pre-mature withdrawal
In this case, you are allowed to buy an annuity product from the 80% of accumulated corpus. So there is no confusion here as the annuity will be taxable income for you year on year.
The confusion is about 20% lump sum withdrawal. IT Department need to come out with clarity. The rules just say 40% of lump sum withdrawal from NPS is tax-free. However, in this particular case the lump sum investment is 20%.
Hence, whether the whole 20% is tax-free (as it is less than 40% tax-free limit) or 40% of 20% is only tax-free (i.e. 8% from 20%). As of now, there is no clarity on this aspect.
NPS Taxation on Partial withdrawal
Partial withdrawal from NPS is allowed on certain conditions. I explained the same in my post “National Pension System (NPS)-New Partial Withdrawal and Exit Rules“.
There is no clarity about the tax treatment relating to this partial withdrawal. However, I feel such partial withdrawal will be taxed in the year of withdrawal as per subscriber’s income tax slab.
NPS Taxation in the event of death of subscriber
For Government Employees-Nominee will be allowed to withdraw only 20% lump sum. The nominee must purchase the annuity from remaining 80%. However, in case the accumulated corpus is less than or equal to Rs.2,00,000 then his spouse (or nominee) can withdraw all the amount at once without any mandatory.
For others-Nominee will be allowed to withdraw 100% accumulated corpus. However, the nominee has a choice to buy an annuity too.
The lump sum withdrawal by the nominee will be exempt from Income Tax. If the nominee opted for buying an annuity, then annuity income will be taxed as per nominee’s income tax slab in the year of receipt.
Hope this will clear all doubts related to NPS Tax Benefits.
370 Responses
Dear Sir,
I am a state govt doctor, covered under NPS…in form 16 issued by my office, under the heading ‘ employers contribution to NPS under CCD2, ‘ no amount is mentioned …but from transaction statement of NPS website, I can see both mine and govts( employer) contribution to NPS…
Sir, my question is, while filing Income tax return, do I need to add employers contribution to salary and then deduct the same under ccd2 deductions…OR I shouldn’t mention it at all
Dear Dibya,
It should be part of your gross salary.
sir i invested in ppf 140000 and 10% nps of my salary is 67274. can i get rebate of 50000 in 80-ccd(1b)
Dear Sanjeev,
Yes.
Hello Sir,
My wife is a central government employee.
She has invested 1,50,000 in 80C.
Her mandatory contribution to NPS (80CCD(1)) is over 1,00,000 and equal contribution is made by employer (80CCD(2)).
My first question is that can she claim her NPS contribution in 80CCD(1B) for tax benefit?
Secondly, in form 16 there is no entry for 80CCD(2). Is it mean that it is not included in gross salary and need not claim same in 80CCD(2)?
Regards
Dear Anil,
Your all questions are already answered in the above post. Please refer again.
Dear Sir,
Thank you very much.
I have gone thru the posts and understood that own mandatory contribution to NPS can also be claimed in 80ccd(1b). I have making this mistake since FY15-16. Every time my investment in 80C was more than the limit and own contribution to NPS is entered in 80ccd(1). So can I go for revised return from FY15-16 to FY19-20? Also my wife received 7th pay arrears in FY18-19. Please guide on taxation part of it as in FY18-19 she was in 30% bracket while the arrears were for the year where she was in 20% bracket.
Regards
Anil
Dear Anil,
You can revise it.
Hi Sir,
I invested 150000 in 80C section i.e 2oooo in PPF and 140000 in Epployer (PF+VPF).
But 80c section limit is only 150000.
Also i have 80CCD(1b) under NPS and APY which is 50000
Now i got to know that 80CCD(2) employer can invest 10%(72000) and this is over and above of (80C(150000)+80CCD(1b)50000)
let sppoose my 10% is around 72000, so can i take tax rebate for 272000(150000+50000+72000)
80C+80ccd(1b)+82CCD(2)
Regards,
Naina
Dear Naina,
Yes.
Sir, my (PPF+LIC) amounts to 120000/-. And my contribution to NPS TIER1 is 80000/-(Mandatory employee contribution of 10% from monthly salary but not voluntary). Can I claim total 150000 (120000+30000) and 50000 (80ccd1b)? Please clarify
Dear Narendra,
Yes, you can.
Sir my contribution to ppf account is 100000 , my NPS tier 1 contribution is 65000 which is deducted from salary . Can I divide the NPS deduction as 50000 under 80 ccd (1) and 15000 under 80 ccd (1b) . So can my total deduction be 165000.
Dear Bar,
Yes.
Hello sir
My home loan principal amount is approx. 1.7 lakh and my contribution in NPS tier 1 is around 80000( compulsory deductable part not volunteer deductable part) .
Can i avail benefit of tax by showing 1.5 lakh in 80 c from home loan principal part and 50000 in 80 CCD(1b) from NPS tier 1 employee’s compulsory deductable part.
Thanks
Dear Amit,
The same question is repeated many times. Please refer my replies to earlier comments.
Sir,
however the office is not allowing it. Can you give any IT clarifications/pdf in this regard?
Dear Prabhu,
Cross question them that to not to allow whether they have any IT ruling or notification in this regard?
sir
if state govt. contibution towards nps is 14% and own contribution is 10% then how much amount can claimed under section 80 ccd2.
Sir, A Tamilnadu State government Employee say a School teacher under CPS scheme covering Rs.210000 in 80C. Now can he/she shift Rs.50000 from CPS to 80CCD(1B) to get a Total Deduction of Rs.2,00,000 under Chapter VI A. Some one told it is possible and some one told not possible. A clear scenario needed sir.
Dear Senthil,
I am not sure what is CPS. These rules are applicable for NPS only.
Sir, I am state government employee covered by old pension scheme. Can subscribe Nps and get deduction under 80ccd1b
If you already covered under NPS, then why one more NPS?
If my 80C limit of 1.5 lakh is exhausted due to Home Loan Principal repayment and LIC premium, can I claim additional Rs 50000 under Sec 80CCD(1b) by investing in NPS?
Dear Bala,
Yes.
I invested in 80 ccd2 tgrough employer. However while filling IT RETURN it doesnt take that amount. How to claim tax deduction though online filling for this element
Dear Gautamam,
If you are unable to claim that, then better to take a help of an expert of your area in this regard.
sir how to calculate tax on rental income of house. Annual rent is Rs.84000/- on house and municipal house tax is Rs.4200/-.
Dear Eswar,
I can’t explain the whole concept in a comment. Better refer the IT Dept tutorials.
sir I am state Government employ. my 80c limit got exhausted and my NPS contribution is(75000+75000). can i claim 50000 under 80CCD(1B) and another 50000 under 80CCD(2).
Dear Eswar,
Please refer above post properly. Only your claim can be claimed under Sec.80CCD1B and under Sec.80CCD2 only your employer contribution.
Thank you sir, please clear my doubt ie. can I claim 80CC+80CCD(1)+80CCD(1B)+80CCD(2) for Rs.2,75000/-(150000+25000+50000+75000).sir please clarify. I am a State government employ. my savings are Rs.1,50,000/- and NPS contribution of Rs.75000/- and my emloyer contribution is Rs.75000/-.
Dear Eswar,
I already clarified. What more clarification you need?
Iam a govt. Employe. My NPS contribution is 66,742 i. e. 10% of Basic + D.A. My savings in Section 80c is already 1,34,000 (PPF+LIC+Tuition fees etc). Can I Split my NPS amount (66,742) in 16,000 under Section 80ccd(1) and 50,000 under Section 80ccd(1b). Deduction under Section 80ccd(2) is 66,742. Please suggest.
Dear Uttam,
Your employer contribution can’t be split. But your contribution you can.
With today’s govt announcement “NPS withdrawal made 100% tax free” , this article will require an edit. Please do the needful.
Dear Vivek,
It is not 100% TAX-FREE. 40% Annuity is taxable for you. You just deferring the taxation for 40%. Anyhow, I will update it soon.
I made NPS transaction on 31march, however the units will be allocated after 1 April, can it be consider for tax saving under 2020-2021?
Dear Ankit,
NO.
Suppose my investment under80 is 1.5lakes,which is not inclusive of NPS.Can I invest up to 50,000 in NPS alone for tax benefit? U/s 80 ccd (1b) so that total benefit is for 2 laks
Dear Unni,
Yes, you can do so. But do you feel it is worth to invest JUST FOR THE SAKE OF TAX SAVING?
consider a Case of central government employee :
A person invest 1 lakh in LIC, 50000 in PPF making a total of 1.5L. Now as a government employee 50000 is deducted (10% basic + D.A) from the salary and contributed in NPS. and the same 50000 was contributed by employer( i.e Central government) in NPS.
Now given below is the details under which the savings or deductions will fall:
80C= 1.5 lakh (1 lakh of LIC + 50000 of PPF)
80CCD(1B)= 50000 (10% basic + DA)
80CCD(2) = 50000 (employers contribution in NPS)
Now my doubt is the contribution that is shown in 80CCD(1B) is correct or not as the person has already saved 1.5 lakh in 80(C) excluding NPS contribution or the person need to show that (50000 (10% basic +DA)) contribution in 80 CCD(1). Is this correct that if a person saves 1.5 lac exluding NPS contribution (either mandatory or voluntary) he can show his NPS contribution (10% basic + DA or mandatory contribution) in 80 CCD(1B) to avail tax benefit.
Dear Vijay,
There is no such hard rule that you must show in the Sec.80C limit of NPS contribution (by your own and employer), to show additional Rs.50,000 under SEc.80CCD(1B).
Consider a case Mr. X is a central government employee. His 80C limit is 1.5L.
His annual salary and saving is as below:
Basic+DA=5.0L
NPS contribution by employee=1.5L
NPS contribution by employer=1.5L
No other saving apart from NPS.
So based on your article he can take following deductions:
80CCD(1) = 50,000 only (restricted by 10% of Basic+DA)
80CCD(1B)=50,000 only
80CCD(2)= 50,000 only (restricted by 10% of Basic+DA)
Is this interpretation correct? Though employee’s NPS contribution is 1.5L but he can use only 1.0L for tax exemption due to 10% restriction.
Dear Rahul,
Yes, your assumptions are correct.
Thanks for confirming.
I guess this raises one more drawback of NPS as a tax saving instrument against ELSS/PPF/EPF which does not have restriction based on basic pay.
Dear Rahul,
SADLY YES 🙂
i have paid through online on 29 march 2018. and My contribution is reflecting in the transaction statement only on 3rd April 2018 and not on or before 31st March 2018 will I be deprived of the tax deduction
Hemant-It happened with one more reader of this blog. Raise an issue with NSDL for the same.
I opened an NPS account (non salaried) on 23rd March 2018 through SBI Online and paid through my SB account online at the same time. I received my PRAN immediately but got only the MAv on 3rd April ( so allotment has happened only on 3rd April). I am entitled to deduction under section 80CCD (1B) isn’t it?
Just wait for PRAN kit, & I- pin, & I-pin.!
Then you can see your profile Contribution Details only after a/c activation message from NSDL-CRA-NPS..
TILL then wait, without haste.
Before that you can enquire your all queries with executives on TOLL FREE NO…If you have any.!
I got my T PIN and I PIN went in and checked my Transaction statement. It is showing the date of contribution as uploaded by SBI as 3/4/2018. hence my query
Good..!
How much Voluntarily you can contribute maximum, you can inquire, if you want to.
As far as I know Voluntarily you can maximum invest upto Rs.50000 for benefit from tax, …. beyond that Could you do investment, Or not.? that you could inquire.!
Amit-There is no such maximum limit for investing in NPS voluntarily. First, differentiate the tax benefits to the maximum limit available for investment.
I invested Rs. 50000 for the additional deduction u/s 80ccd(1B).My query is just that since my contribution is reflecting in the transaction statement only on4th April 2018 and not on or before 31st March 2018 will I be deprived of the tax deduction
Geetha-Yes.
Geetha-If investment date is showing as 3rd April, then you are not eligible to claim tax benefits for FY 2017-18.
But then my investment was made on the 23rd of March 2018. How can I be held responsible for any delays on the part of SBI or SBI Pension Fund or NSDL?
Geetha-NSDL in my view update it when it will realize the payment. As you are claiming you did it through net banking facility, it is the fault of NSDL to update the same. Contact them and correct it.
NSDL take 7 days to update normally. You explained the date of investment so that it clarifies that you will get benefit in Financial year 2017-19 only. Feel free to ask to Toll free number for clarifying your doubt. And let it know on this blog to help others.
Amikumar-For your information, Geetha already pointing that in her statement is already reflecting with date of post April 1st 2018.
Will do so once I get the final word on this matter. Thank you for showing interest.
I have raised this issue with SBI as well as with NSDL. I am awaiting their response. I will post it in this site when I get to the final word on this matter. Thank you for responding. In the meanwhile , anyone reading this post can suggest if there are other avenues to have this grievance redressed in case it does not turn out to be positive with these sources.
Geetha-You can raise the issue with PFRDA also.
Yes I did call PFRDA on their toll free no. But that number is meant only for instructions on ‘ how to’ matters and not for complaints. I did get an email id though from them ‘nps.trust@pfrda.org.in’ and have sent a mail to them also. Let us see.
Geetha-Try to contact your nearest PFRDA POS.
I got a response from PFRDA. Positive response. The mail content given here also talks of a link where we can get the statement of Tier I which is tax deductible which clearly states the FY for which the tax deduction is available – FY 2017-18 in this case. Thank you all
From email id nps.trust@pfrda.org.in
Dear Subscriber,
It is clarified that the contributions made by the subscriber or duly debited from the account of the subscriber amounts to a ‘payment’ or ‘deposit’ as provided under the Income Tax Act, 1961. Such deposits or account debited even on 31st March 2018 will be admissible for Income Tax deductions for the Financial Year 2017-18, although the same may get reflected in his pension account in the first week of April of subsequent Assessment Year. You may kindly submit your bank account statement proof along with the SOT of your PRAN for ITR filing. However, please note that the subscriber has to ensure that claim made once must not be claimed in the subsequent financial year for the same contribution amount.
Also, you can view the “Transactions Details for Employee’s Voluntary Contributions under NPS” by logging-in to your NPS account at http://www.cra-nsdl.com through your login and passsword and follow the steps given below:
1. Go to Views Tab.
2. Select ‘Statement of voluntary contributions under NPS’ and select the required financial year to view the details.
You may also attach this as proof for ITR filing. Hope this clarifies.
Regards,
NPS Trust
Dear Geetha,
Thanks for clarification from PFRDA and thanks for sharing this.
It’s their protocol of consuming these much days to reflect the investment. Don’t worry,…. when you invested at the same time that invested amount had must been deducted from your bank account….! that’s why not to worry, let them take their own time.
Amit-Please look at Geetha’s comment. She is pointing that the date of the transaction is reflecting in FY 2018-19 rather than the actual date of her investment. Is there any such protocol that it again change the date at later stage??
Basu, If you feel my interpretation of IT section rules as mere assumptions. I clarified already by asking my queries in various workshops
conducted by CRA-NSDL regarding NPS. As said earlier, why don’t you ask other IT officials for your doubts regarding my interpretations. It doesn’t make you minor by asking for clarification. We are not here to judge anybody. We can tell person who wants to listen clearly. We can help other citizens for better understanding of IT Section rules as per knowledge & understanding. For proofs we can contact IT & NSDL OFFICIALS on their website contact details for the way they elaborate implemented IT section rules, instead of debating for your assumption or my interpretations. Ultimately there shall win Truth.!
Amit-I am asking you IT Dept clarification for your so-called UNDERSTANDING SITUATIONS. Do you provide the same??
SAME CONDITION WITH ME AS WELL. PLEASE ADVISE !
Please see my response above today
Dear Basav,
I am 35 years old.
My sec 80 limit (1.5 lakhs) is already covered with PF, PPF, ELSS, Life Insurance, Term Insurance, child Tuition fee etc.
Planning to invest in NPS (50K) under 80CCd (1b) to claim the extra tax benefit of 10K every year. I fall under 20% bracket at this stage and soon will be in 30% bracket.
Rough analysis
25 years * 50K = 12.50 lakhs
Tax savings = 25 * 10K = 2.5 lakhs years (approx. and it will increase when moving on to 30% slab)
60% can be withdrawn after retirement = 7.5 lakhs (approx. excluding returns)
40% to be invested in annuity = 5 lakhs (approx. excluding returns)
40% out of 60% is tax free (i.e.) 5 lakh no tax
20% is taxable (i.e.) tax on 2.5 lakhs – Is it 20% out of 60% or 20% out of 100%?
40% annuity pension will be taxed based on tax slab prevailing at the time. approx. 1-2 lakhs per year and honestly the tax slab would outweigh my annual income as I am retired. Practically no tax for the annuity pension.
Do you think it is worth / good idea to invest in NPS? Please provide your opinion.
Manikandan-When you buy an annuity with 40%, then such annuity is taxable income. Also, due to NON-liquidity, no freedom and strict exit rules makes it to stay away.
Basu,
Then why don’t you suggest things to stuck with like worthy, non strict, full of freedom unlike NSDL-nps.
Amit-It is your own interpretation which you feel correct. What can I say to you?? 🙂
We are not here to fight for oneself is correct and other not. But we should understand the way how anyone can extract meaning of one sentence, while other’s with another meaning. Either There could be differences in understanding situations, ways, puzzles; Or there could be differences in reactions to same incidence; Or there could be varity in grammatical understanding of sentences as per learnt grammar & vocabulary of language by each individual differently. Learning is continuous process; we should be ready to accept whenever comes our way. Being expert, Don’t follow blindly but try to search/ investigate for backing particular notion of ones understanding/ explanation. We expect it from experts for straight true factual guidance without misleading.
Hope for factual proofs you seek.! ??
Amit-I am asking you IT Dept clarification for your so-called UNDERSTANDING SITUATIONS. Do you provide the same??
I am having SBI Home Loan for 12 Lakhs from April 2014 with the interest of 8.85% interest & paying Rs.90000 interest and Rs.20000 principal money this year.
I don’t have any other saving except life insurance & also planning to save/invest Rs.70000 this year to get Tax saving under 80C.
Now,
Do I invest in mutual fund?
Or
Pre Pay my home loan ?
Please advise me, Which one will be more beneficial ?
Vijay-Hard to say anything BLINDLY.
I have invest in 80C of rs 1.5 lacs by elss and insurance, my mandatory contribution is rs 58000 under 80ccd1 i.e. 10% of basic +D. A
Can i claim above contribution under 80ccd1b of rs 50000 as a addtional
Girish-YES.
Employee contribution in nps i. E. 10% of salary is part of deduction which comes under 80ccd1
I have not done any addtional investment in NPS.
When I have not contributed to NPS other then Employee contribution then how it can be classified under 80CCD1B. Kindly throw some light on this issue.
Every where it is written that there should be additional contribution in NPS to be eligible under 80CCD1B
Girish-Employee contribution is not your contribution? There is nowhere mentioned that it must be contributed from your own pocket additionally to avail this deduction.
Can u provide me the incometax circular on same
Girish-Please search for the same in IT portal.
Then sir what is difference between 80ccd1 & 80ccd1(b)
And what is need to create a sperate clause of 80ccd1(b)
Girish-Additional BENEFIT!!!
I had invested Rs.50000 in NPS as Voluntary Contribution to avail additional benefit of tax. I was worried about what were the ways to invest for additional tax benefit. But I tell you, It’s quite easy to invest in NPS through Net Banking only. You could invest either through NPS app Or eNPS website by login with PRAN No & I-pin/ password.
Additional means Voluntary Contribution other than your must salary contribution. To invest you could follow eNPS Website protocol for availing additional tax benefit on voluntarily invested Rs.50000.
Share your view after successful investment.
Amitkumar-It is your interpretation that ADDITIONAL means VOLUNTARY ?
My deduction under 80c is Rs. 150000/-. My contribution towards NPS is 50000/- under 80CCD (1B). Can I now take additional 50000/- u/s 80CCD (2)?
Abhinab-Refer which contribution is eligible for Sec.80CCD(2).
Is the employer contribution towards NPS not be included in the gross salary?
Abhinab-It is cost to company not your gross salary.
Thanks for your responses but my query is not cleared yet. I still dont know whether I can deduct the employer contribution to NPS or not?
Abhinab-You can deduct the employer contribution???
That section 80ccd2 for Tax benefit is only for Employers offering Employment not for the Employees.
Sir, I am a central govt.employee. my contribution for 80c is only 125468, and 65149 is my NPS contribution. Can I claim 125468+15149(65149-50000=15149)=140617 for 80C , and 50000 for CCD1(b) separately or how should I claim for 80 ccd1(b).Please clarify …
Sunil-You can split that NPS contribution like what you explained. But do remember that the contribution should not of employer.
Additional means Voluntary Contribution other than your must employee salary contribution.
To invest you could follow eNPS Website protocol for availing additional tax benefit on voluntarily invested Rs.50000 according to Section 80ccd(1B).
Share your view after successful investment.
Amitkumar-It is your interpretation that ADDITIONAL means VOLUNTARY ?
Hi, may I get the proof or any letter by tax dept.for split of NPS contribution deducted from my salary between 80C and 80CCD(1B).So that I can convince my DDO.
Daleep-Refer IT Portal for the respective sections.
Splitting of NPS mandatory contribution is not at all entertained by IT Dept.
Mandatory NPS contribution is calculated for 80cc, however Voluntary Contribution in eNPS is calculated for 80ccd(1b).
Additional means Voluntary Contribution other than your must salary contribution. To invest you could follow eNPS Website protocol for availing additional tax benefit on voluntarily invested Rs.50000.
Share your view after successful investment.
Amitkumar-“Splitting of NPS mandatory contribution is not at all entertained by IT Dept.”-Any valid proof of your claim??
hi,
Is contribution made to contributory pension scheme (CPS) which is implemented to state govt employees of tamil nadu instead of nps, eligible for deduction under 80CCD1b
Kalaiselvi-I am not sure about this. Check with concerned Government notification.
Yes, it could be parallel system as NPS in other states. Clarify this to your District Treasury, or Can inquire with NSDL Officials or IT officials contact numbers.
Hi. I have saving of 180000 in Tier 1 as govt employee. 31000 in LIC and 20000 in PPF. Can I split CPF contribution in a manner to get additional 50000 under 80CcD(1B) or I have to make additional payment of 50000 through gateway on eNPS
Shyam-Your contribution in NPS can only be considered for Sec.80CCD(1B).
Additional means Voluntary Contribution other than your must salary contribution. To invest you could follow eNPS Website protocol for availing additional tax benefit on voluntarily invested Rs.50000.
Share your view after successful investment.
Amitkumar-It is your interpretation that ADDITIONAL means VOLUNTARY 🙂
Whether the section 80 ccd (2d) makes only employer’s contribution to NPS or both employer’s as well as employee’s contribution in total tax exempt.
Pls clarify.
Virender-ONLY EMPLOYER.
R/S I am a teacher under Haryana Government .
My savings through ppf =125000
And childrens tution fees is = 35000
Total 160000
And NPS deduction from my salary other than Government share is = 52000 . May I claim 150000+50000 =200000
Virender-Yes.
No way:Basavaraj & Virender.!
‘Mandatory Employee Contribution from Salary’ does not come under 80CCD(1B), but only ‘Voluntary Contribution paid by Net Banking on eNPS payment portal through PRAN login & I-pin password.
Mera 80C = 189213 child tuition fees
80CCD(1) = 50686 CPF
Total 150000+50000 ka chhut valid hai in bihar gov.
Samea-Yes, you can claim so.
No way:Basavaraj & Samea Akhtar.!
‘Mandatory Employee Contribution from Salary’ does not come under 80CCD(1B), but only ‘Voluntary Contribution paid by Net Banking on eNPS payment portal through PRAN login & I-pin password.
Amitkumar-Provide me your assumption that MANDATORY contribution can’t be claimed under SEc.80CCD(1B).
https://www.ndtv.com/business/nps-national-pension-system-exemption-can-be-availed-until-march-31-1825101?amp=1&akamai-rum=off
Amit-I need notification with respect to your claim.
Can you give notification explain segregation on eNPS amount of DCPS in 80CC & 80CCD(1B).
Amit-There is nowhere separate notification by IT Dept stating benefits of investors who use eNPS. Not sure where you read and not sure the source. I need authentic CBDT notification.
Can you provide your base of explanation in notification of segregating/ dividing DCPS in between 80C & 80CCD(1B). Either give successful fileing of FORM 16 & Income tax Return Statement of one customer having NPS Tire-I a/c with no objection from NSDL Bangalore.
Amitkumar-Refer the IT Dept notification in this regard. There is nowhere written that to claim deduction under Sec.80CCD(1B), one must have SELF CONTRIBUTION and also from eNPS.
Amit is absolutely right. Only the amount that you contribute over and above the maximum allowed 10% deduction to NPS from salary can be claimed under section 80 ccd1(b)
Sanjay-But I need the valid IT clarification where it is mentioned as per Amit.
I wanted to asked that , one of my friend is IPS officer since 2000 and deduction under government pension scheme is been made .
Can he personally invest in new NPS account and claim the deduction u/s 80CCD(1B) over and above 1.5lakhs deducted under pension scheme
Abhishek-Yes, but do you feel NPS is a great product for retirement?
No way:Basavaraj & Samea Akhtar.!
‘Mandatory Employee Contribution from Salary’ does not come under 80CCD(1B), but only ‘Voluntary Contribution paid by Net Banking on eNPS payment portal through PRAN login & I-pin password.
It’s for Investing for additional tax benefit & more over providing government finance for country development.
It’s up to you how you think.!
Hello,
I have investment of 150000 in 8OC ( include ELSS+ PPF). If I add 50,000 in NPS tier 1 then I am eligible for tax exemption upto 200000?
Our office form c is not showing this exemption,then can I get during ITR?
Jigyesh-Yes, refer above rules properly.
R/Sir , I am a Maharashtra State Govt. Employee.
My savings are LIC 45590 , GIS 5760 , House Loan Principal 68383 , Sukan ya Samruddhi Yojana 6000 and NPS 75478 Total 201201
My question is that can I split my NPS contribution of 75478 as 25478 in 80CCD1 (80 C ) and 50000 in 80
CCD1B and by which clause this splitting is possible?
Also State Govt. contributed 75478 towards my NPS account.
Ashvini-Your contribution to NPS can only be eligible for split but not your employer contribution.
Splitting of mandatory NPS Contribution can not be termed as in 80ccd(1B) Voluntary Contribution of Rs.50000 for additional tax benefit.
Mind it.
I hav studied this only, enquired regarding this a lot in NPS Workshops, this blog &many more….
Then experimented by investing Rs.50000 ownself in eNPS portal with Voluntary Contribution for additional tax benefit.
It’s easy.
Try it.!
Means you contracdting with author..
Rules made by CRA- NPS i.e. Government…..Neither me nor the Author of this blog.
Author of blog help us to understand the rules made by government as per author’s understanding.
I am not even financial expert. I don’t mean for contraticting his views, but I explained according to my experience.
Initially I was not understanding this 80ccd(1b) section, i also enquired in this blog as you & others in replies. I wanted to avail additional tax benefit from last 2016-17 But after that I studied & experienced with demonstration of eNPS investment of Rs.50000 for additional tax benefit in this 2017-18 financial year.
Then I am replying in this blog for others to guide as per my experience. If anyone wants to correct me, please welcome.!
Do reply in response.!
Amit-May I know where it is mentioned that MANDATORY NPS Contribution can’t be segregated like this? Let me know IT Section.
Amitkumar-There is no specific MANDATORY or VOLUNTARY contribution mentioned in Sec80CCD(1B) to arrive at the assumption which you are saying. If your assumption is right, then show me the wordings defined under this section.
In my NPS contribution online statement of NSDL following comment Note is mentioned:
Additional Tax benefit w.e.f 2015-16. From F.Y. 2015-16, subscriber are allowed extra tax deduction in addition to the deduction allowed under Sec. 80CCD(1) for additional contribution in his NPS account subject to maximum of Rs. 50,000/-under sec. 80CCD 1(B)of IT Act, 1961.
Amit-They mentioned ADDITIONAL CONTRIBUTION but they not clarified it must be from EMPLOYER’S own pocket. Please read once again of what you are sharing. It is your own assumption which you are sharing by your own decisions.
No way.
I sharing only after confirmation. I don’t want you to make wrong.
But to focus on true meaning. I studied it consulted with CRA- Authorities in various workshops.
If you want to understand then get true meaning by experts, but do not share confidently your mear assumption feeling
it to be correct meaning. Because everyone reading your blog expects to be true facts, they believe your text, even i have believed in your this fact. I clarified then objected. If you think so then feel free to study it & inquire it. If you are kind enough then appreciate my objection for correcting your view, blog, consultancy beliefs. I will suggest you to talk to CRA- NPS Authorities on toll free no. 1800222080 for your understanding. I just talked today on this to confirm my perception of this rule. Hope you get it.
Amit-Your money and your intrepreatoin. Rest left with you to decide. I follow IT Dept notification which clearly specify and not differentiate between the contribution from your own pocket to contribution while employment (when it comes to Sec.80CCD(1B)). Rest left with you to decide.
Why you panic… I have given you the toll free no. 1800222080 , you can call & clarify to resolve your set opinion on IT dept notification. I inquired again with IT dept after your comments, which supports my perception of notification. Wel, whatever you decide.! It’s a matter of debate for you to prove yourself. “Additional contribution doesn’t fall in mandatory salary contribution of employee & employee contribution falls under 80C, However additional contribution interpreted as Voluntary contribution.”, this is explained by NSDL-CRA-NPS IT OFFICIAL , not me. I just
want to correct you not to spread wrong opinions & perception. Decide whatever you want to. All the best.!
Amit-What is there to PANIC!!! 🙂
Regarding this confusion, I rely more on IT Dept rather than NSDL.
Why don’t you consult IT AUTHORITIES then, get clarified before being too much ruminating same story & opinion.
Amit-IT Dept clearly defined what is Sec.80CCD(1B). I am not sure about your confusion.
Why you are stuck rigidly
to one thought. Have some space to read again and understand freshly, also don’t feel bad to ask IT
official
regarding
this
notification
to
elaborate,o
otherwise ask other experts.
Amit-I am not at all rigid. But the IT Dept definition is very clear. It is you who is intreprating it as per your comfort. In such a situation what can I do?
I think you don’t really read replies. I have written clearly that, I followed after study & consulted IT officials, then only I followed confirmation. It’s not at all my assumption. IT Income tax notification precisely mentioned rule, explanation should be clearer with process of discussion with experts & experienced. It’s pathetic being inclined to one view without experience.
Amit-If you consulted IT Officials, then can you share their clarification (not the lines but the images of their clarification as a proof). If you are unable to share here, then you can email me the same at tonhokrani@gmail.com. I will definitely check and share the image of that clarification in this post.
I need clarification by IT Dept proof.
I am govt. employee My NPS contribution is 68000 and other investments such as LIC , PPF etc is 134000 then help me in distributing these amounts under various sections of income tax
Sarosh-What is your doubt?
Can i take benefit of 80C upto 150000 by adding 16000 from NPS investment and rest amount (upto 50000) under section 80CCD(1B)??
Sarosh-YES.
Why don’t you add Rs.16000 in PPF to round up Rs.150000 under 80C & INVEST Rs.50000 Voluntary Contribution in eNPS for additional tax benefit over and above Rs.150000, to avail Tax benefit on Rs 200000 collectively.
Hi,
I am HR in a private company.
1)Need to know whether 80CCD(2) has to be contributed by employer only if employee contributes under 80CCD(1) right?
2) or can contribute only 80CCD(2) by employer
please clarify
Anand-Whatever your contribution is there it will be under Sec.80CCD(1) and employer contribution be under Sec.80CCD(2).
I am a Central Govt Employee under pension scheme. Can I get benifit of 80 CCD1B.if yes how. I am investing in share and mutual find since last 15 yrs
Ajay-YES. How? It is explained in above post.
I am maharashtra state govt employee. I already have Tire-I a/c since 1.5 years. I want to invest in Tire-I additionally other than employee contribution for 2017-18; in order to avail Tax benefit under 80ccD(1B). But I am puzzled about “what is the procedure for investing voluntarily in Tire-I additionally other than employee contribution”.
I have asked many but , no one could guide me for this issue.
Please explain me the procedure at the earliest as my office asks me to submit 16B form in haste.
Amitkumar-Approach any POP-SP or your Nodal Office or alternatively you can visit eNPS website and contribute more.
Thanks.!
I have asked all of them, even They also unable to tell me the way. They even don’t know the way..!!!!
That’s why I asked you.
Wel, i tried on e-NPS website but in any of the pages nothing was found to enter/submit the additional amounts.
You can try personally alongside with any PRAN/NPS bearing customer.
Amitkumar-Then approach PFRDA for the same. I can’t try as I am not NPS subscriber.
Wel, I was happy when I tried successfully to invest in eNPS voluntarily.
‘Mandatory Employee Contribution from Salary’ does not come under 80CCD(1B), but only ‘Voluntary Contribution paid by Net Banking on eNPS payment portal through PRAN login & I-pin password.
It’s easy, safe, additional investment, additional tax benefit & not least for share money for government’s constructive projects fund for country/ charity.
Amit-May I know where it is mentioned that MANDATORY NPS Contribution can’t be segregated like this? Is it in this IT section??
Hi sir
My total income is 562408.
I have invested 60000 in PPF and 90000 in tax saving ELSS. In NPS 24000 invested. Can I show 24000 in 80ccd(1b). If my 80c is already 150000.is it allowed me 24000 in 80ccd(1b)
I am up govt employee. Recently NPS deduction starts since last four months
Mukesh-Yes, you can.
No…. not at all..! , nowhere it has been mentioned that Mandatory NPS Contribution can be segregated after 80C of Rs.150000 limit crossed including Salary Contribution in NPS.
Amit-May I know where it is mentioned that MANDATORY NPS Contribution can’t be segregated like this?
But it’s written that ‘ to save additional tax in 80CCD(1B) , it can be contributed voluntarily in NPS up to Rs.50000 to avail Tax benefit above normal tax benefit on Rs.150000 (according to Deductions under Chapter VI-A (Section 80C)). Moreover for additional tax benefit on Rs.50000 upto overall ?200000 according to Section 80CCC & 80CCD(1B) to sum up in ?150000 of Section 80C including GPF, PPF, DCPS,GIS, Insurance Premiums, etc). Salary Contribution is termed as DCPS in NPS a/c, however its specified in eNPS Website that to it’s offered exclusive tax exemption on ?50000 if invested as Voluntary Contribution in Tire-I a/c through eNPS (income tax rule 1961 section80cce).
If you don’t get this after my clarification.
Then please inquire with CRA-/NPS authorities / email their customer care services.
If ypu find I had wrongly interpreted, then let me know.
Amit-I want where it is written. Is in the notification of IT Dept?
Hi Sir,
I invested 169108 in 80C section i.e 1ooooo in PPF and 69108 in LIC.
But 80c section limit is only 150000. How I can show 19108 amount?
Can I show that in 80ccd(1b). If not how to show that can you please help me out.
how much maximum amount we can show in 80ccd(1b) if my 80c is 150000 already. Is it only 50000 allowed in 80ccd(1b)?
Naveen-You can only show Rs.1,50,000.
Can Government Employee who has GPF can avail the benefit of Rs. 50000 of NPS?
Maulik-There is no link between GPF and NPS. Hence, you can avail this benefit.
Sir I m a govt employee and my basic + DA part of gross salary is 5 lac. So employer contribute my and own part is 1 lac ( 50k+50k) in NPS. and employer also contribute previous year Nps in this financial year 25k of each. So total contribute of my part is 75k and also of employer is 75k. So I can relief in 80CCD(2) is 50k ( 10% of my basic + DA) as you mentioned. Can I show my own part of Nps 75k fully in 80CCD(1). And also guide for 25k of employer part of previous year.
Rahul-Yes, you can show your part fully.
How much we can save under section 80C, 80CC, 80CCD, 80CCD(1), 80CCD(2) and 80CCD(1B) collectively?
Kaustubh-Refer above post properly. It is already explained.
is the claim under 80 CCD (1) comes under 80 c
Raj-Yes, this is what I already mentioned in above post.
I am a student and wanted to clarify when the deduction under section 80CCD(1B) is allowed to an assessee?
Kritika-If you are an investor (major as per tax law) under NPS is more than Rs.1,50,000, then you can take the tax benefits under Sec.80CCD(1B).
I am a bank employee and entitled for leased accomodation for which my employer pays the lease rent. The lease rent per month is Rs. 15000. My doubt is if this amount of leased accomodation rent paid by the employer is added to my taxable income, how much will be the tax deduction i can claim if my salary excluding this amount is Rs. 6.50 Lakhs, and investment under 80C is Rs. 1.50 Lakhs?
Daljeet-The accommodation provided by the company is treated as a ‘perquisite’ in the hands of employee and is considered to be a part of your taxable salary.
Sir My NPS contribution is 85000 & Other PPF,LIC etc. is 90000 please clear which option is correct one for my case:
Option A: 80C+ 80CCD(1)=1500000
80CCD(1B)=25000
OR
Option B: 80C+80CCD(1)=1250000
80CCD(1B)= 50000
Pooja-First option.
Sir, I have investments under 80C 165000 (excludind NPS) and my investment in NPS is 152000. What amount I can claim under 80CCD(1) and 80CCD (1B)?
Thank you.
Jahfarali-You can only claim under Sec.80CCD (1B) as per above limit.
Thank you sir
Total income from all sources 650000, my contribution to nps 51000 and my employer contribution is also 51000 and employers contribution is also added in gross salary. I want show my contribution as 80ccd 1b, if I invest 148000 in ppf, can I claim my total saving 250000
Davinder-You can do so.
Sir,
Equity mutual fund comes under 80C?
Dey-Not all but only specific products like ELSS.
Sir,
I have total savings 150000
NPS contribution. 70000
How much tax benefits may I have and under which section?
Thanks
Subodh-Refer the above post properly.
Thank you sir.
My investment under 80c is RS. 150000/- without nps and my nps contribution is RS.47000/-. Can I put my nps contribution under 80ccd(1b).
Anupam-YES.
Hi Sir,
My current 80C investement ( LIC Policy) is 40,000 & if my self contribution to NPS is 50,000/-
Can I include my self NPS contribution amount of 50,000 in 80CCD (1B) even though my 80C investement is only 40,000?
Vinod-If Sec.80C is not filled, then why you are worrying to claim under Sec.80CCD (1B)?
Hi,I am an employee and I want to invest 1 Lakh in NPS tier I this year. But my organisation doesn’t deposit in NPS for me. If i invest 1 lakh as an individual , can i claim as below:
SEC 80 CCD 1 – 50,000
SEC 80CCD1b – 50,000
Ashish-Yes.
thank you very much
Hello Basavraj,
NPS is not a Tax saving scheme. Its a tax deffered scheme. means you have to pay the tax after the age of 60 on the 20% of the accumulated amount. Also you need to pay tax on the income from annuity plan as per the Tax bracket you lying in.
If a person’s salary is 2.5 Lac. He doesn’t comes to any Tax brackets. What if such person opts for NPS and deposits some part of his income annually in order to get only pension benefits after age of 60. Will he have to give tax on 20% of the accumulation at maturity. If such is the case then better not to go for NPS as he neither getting the tax benefit during his working years and will pay tax as well on the maturity. Don’t you think its a drawback in the system or do we have some other clauses placed for such cases in the scheme.
Regards,
Ashish
Ashish-This is what I am pointing since the beginning. All concentrating only on the few bucks of tax benefits available with this product. But forgetting the larger picture of taxation which one has to face during that fag end of life.
I had received notice from Income tax dept. after filling e-return under Sec. 143 1(a)(vi) because of i had seen my Atal pention yojna savings under 80ccd (1B).
so i want to know atal pention yojna savings in which section of Income tax deduction done.
Tarun-APY and NPS tax benefits are one and same (as explained above).
I am having APY of 6900/-.No other NPS other than this.While submitting the return wheere shall i mention this amount under 80CCD(1) OR 80CCD(1B).
fyi,I am having full 1.5L investemnt by PPF & LIC premeum.Wan to know the tax benefit of APY amount shall i get above 150000 ??
Shubhasis-Under Sec.80CCD(1B).
If govt/employer share in nps, not include in gross salary, then can we claim 80ccd(2) benefit, in tax
Sir ,
How one can claim tax benefits for employer contribution if it’s not shown in taxable income?
Sanjay-I think, I already replied to your email.
Amarpreet-I am not sure why such doubt. But there is no such clarification from CBDT.
CAN A AMOUNT OF 80CCD(2) IS ELIGIBLE FOR TAX DEDUCTION, IF EMPLOYER CONTRIBUTION THROUGH NPS NOT SHOWN IN GROSS INCOME IN A FINANCIAL YEAR
Amarpreet-Employer contribution to EPF is not your income. Hence, no question of showing the same in gross income.
No
I have deposited Rs. 110000.00 to PPF and my employer deducted Rs.60000.00 as NPS (10% of basic plus DA) from my salary. I have not done any voluntary contribution to NPS. So the sum is Rs.170000.00. Can I now claim as follows:
80CC— Rs.110000.00 (from PPF) and Rs.40000.00(NPS contribution)
80cc1b– Rs. 20000.00 (NPS contribution)
Ashish-YES.
Sir, I have a similar case.
PPF:1,40,000
NPS: 60,000 (employee) + 60,000 employer
I understand what you are trying to say. I tried explaining to the concerned fellow in my PSU, but he did not agree. Is there any circular or any rule regarding this..
(He says that the employee contribution of Rs. 60,000 that I made can not be counted under CC1 (b) as the contribution was mandatory and not voluntary.)
I am claiming as follows:
80C: 1,40,000
80CCD(1): 10,000
80CCD(1)(B): 50,000
80 CCD(2): 60,000
I hope I am correct
Nitin-But nowhere it is written in IT Dept notifications that such contribution should be voluntary to claim.
Means you are breaking the investment under NPS as per your need…It is allowed..
Sir,
I have invested Rs 90,000 in PPF & LIC, NPS employee contribution is 91,000 and same for Employer contribution. How can I take maximum tax benefit. Please Reply
Lokesh-Under Sec.80C Rs.1,50,000 (LIC, PPF and Rs.60,000 from NPS), Sec.80CCD(2) Rs.91,000 and Sec.80CCD(1B) Rs.31,000.
Hi Basavaraj
A doubt related to above SIP investment ?
I am planning to invest in SIP. I would like ask , return investment after 3 years of maturity which I will receive is taxable or I have to pay tax on such investment.
I have already saved 1.5 lac in 80 CCD (without SIP). So is my investment for future.
Singh-May I know in which product you invested? NPS or some other product?
I have invest in EPF & PPF (i.e. EPS- 50K and PPF – 1 lac= 1.5 lac under section 80C).
Section 80CCD(2) of income tax describes about NPS contribution made by the employer and me as an employee can claim tax exemption under this section.
But as this employer contribution is not taken as part of salary can I claim this exemption directly under section 80CCD(2) or I should add the employer contribution to gross salary and then claim the exemption under section 80CCD(2). Please clarify should i add employer contribution to gross salary and then claim this exemption.
Vinayak-In my view, you have to add it to salary and then claim benefits.
Sir,
I am working with a public sector entity. Our wages for the period Nov 12 to Mar 16 were revised and the arrears for the same was credited during the month of Jun 16. Difference in NPS (@ 10%of (Basic + DA)) on the revised and old basic + DA was deducted and credited to my NPS account in Jun 16.
My query is whether I can show this NPS deductions, on the arrears for the period Nov 12 to Mar 16, u/s 80ccd(1) b for FY 2016-17?
Baji-Salary for income tax purpose is considered as either DUE or RECEIPT basis (whichever is earlier). In your case, I think it is due which is early. Hence, you can show it in IT return.
Thanks for the reply Sir.
As stated earlier I have received arrears for the period from Nov 12 to Mar 16 in month of June 16. I will be claiming relief u/s 89 for the said arrears during FY 2016-17.
I have already made investments of 1.5 lakhs in NPS (deducted for FY 016-17), LIC and PPF to be claimed u/s 80C for FY 2016-17 and want to avail the additional exemptions u/s 80 ccd(1) b by claiming exemptions for the additional NPS contributed from the arrears due to change in the pay scale.
My query is can i seek exemptions u/s 80 ccd(1)b for the NPS contributed from the arrears in FY 2016-17 on one hand and claim relief for the arrears u/s 89 to be spread during FY 2012-2016 on the other hand?
Thanks
Baji-YES you can avail both.
Dear Sir
I am working in a pvt company & contributing EPF- 58000, Insurance Policies- 48400, ULIP- 12000, ppf- 30000, Repaying Housing loan (Principal)- 51170, Pension fund-10153.
Apart from above annually my employer contribution in NPS- 45168/-.
kindly guide me on deductions can be claimed by me along with NPS.
Shekhar-Pension Fund means NPS?
no, its LIC Pension fund – 80CCC.
Shekhar-Your other investments cross the Sec.80C limit. Hence, your NPS contribution can be claimed under Sec.80CCD(1B).
Sir,
Can I claim tax benefits from of employer contribution under 80ccd(2) if employer contribution is not mentioned in our total salary (taxable income), stil everyone have confusion on this
Sanjay-Mentioned or not that is different. However, you can claim it if your employer actually paying for NPS.
Sir I have a doubt, can you please clarify with the below scenario?
Let us assume:
I am a salaried employee with private firm. I work for a private sector Hospital which joined Corporate NPS scheme.
I make PPF contribution of 10K & Home Loan repayment 90K including LIC premium 50K, and claim further tax exemption of 1.5L under sec 80C
As per form-16 which I received from my finance dept, total contribution to NPS from employee (self) is 72K and equal contribution is been made by employer i.e. 72K.
Will that make my total tax exemption 2,72,000? (PPF=10K, HL repayment= 90K, LIC= 50K + NPS employer contribution = 72K + NPS individual contribution = 50k)
Rajani-Home loan principal or interest repayment?
I have mentioned HL repayment means (Home Loan principal) u/s 80C is 90K.
Now pls clarify, will that make my total tax exemption 2,72,000? (PPF=10K, HL repayment (principal amount)= 90K, LIC= 50K + NPS employer contribution = 72K + NPS individual contribution = 50k) Thanks
Rajani-Home loan repayment of Rs.90,000 is interest or principal???
principal.
Rajani-PPF Rs.10,000+HL Rs.90,000+LIC Rs.50,000=Rs.1,50,000 Sec.80C limit over. Now regarding Rs.72,000 NPS contribution by your employer, check the above condition and least of all 3 conditions will be eligible for deduction under Sec.80CCD (2). Your additional Rs.50,000 contribution to NPS can be calimed under Sec.80CCD (1B).
Hope you got the clarity now.
Plz reply
There is two components of NPS in my form-16 is
1. NPS contribution made by employer i.e. 72000.
2. Another one is deducted from my salary as NPS contribution……i.e 72000
There is no additonal contribution made by myself in NPS.
I have already saving of 1.5 lac u/s 80C.
Kindly guide on which section can I claim my NPS contribution to minimize my tax.
Thanks.
Rajani-Employer contribution of Rs.72,000 under Sec.80CCD (2). Your contribution Rs.50,000 ONLY under Sec.80CCD(1B).
Dear Sir,
I have investment of LIC – 1,00,000 and Sukanya Samriddhi – 50,000 in 80C. I am planning to invest in NPS of 50,000. Should i show under 80C NPS or 80CCD 1B NPS. I am salaried individual working for a private firm.
Vijay-You have to claim that Rs.50,000 from Sec.80CCD(1B) only.
Hello, I am 30. I am contributing under different sections under 80C like NPS(50000), LIC(75000), ELSS(25000) which sums up to 1.5 Lakh.
Can I contribute another 50000 toward NPS 80CCD(1B) ? Please bare in mind I am already contributing 50000 toward NPS under 80CCD (1) and want to take additional benefit under sec 80 CCD(1B)
Pritam-YES.
Sir – the article was informative. However a lingering doubt that I have, can you please clarify with the below scenario?
Assumptions:
1) I already have an individual PRAN and I claim Inr 50K tax exemption under 80 CCD (1B)
2) I make PPF contribution of 80K & EPF contribution of 70K, and claim further tax exemption of 1.5L under sec 80C
3)I work for a private sector company which joined Corporate NPS scheme in April 2017, and extended the option of subscribing to corporate NPS to all it’s employees
4) Now, I migrate my PRAN to my company’s corporate scheme and structure my salary in such a way that 10% of my basic salary goes into my NPS account – let us say another 60K ; and I continue with my aforementioned individual contributions to PPF, EPF & NPS.
Will that make my total tax exemption 2,60,000? (ppf=80K + epf = 70K + NPS employer contribution = 60K + NPS individual contribution = 50k)
Arun-Yes, you can claim the total benefits of Rs.2,60,000. However, effective from this FY, the slab of 10 of Basic+DA for employed has been raised to 20.
Thank you for clarifying!
It’s strange that the communication we received from our payroll team states 10% as the slab. Even our salary structuring tool permits only up to 10% of basic to be routed to NPS. However we have the flexibility to increase the basic component of the salary.
Arun-The maximum limit is raised to 20%. It does not mean that they also have to increase.
Sir,
I am working in a PSU and under NPS Scheme. My total NPS during the FY 17 was 70,000/- Please clarify whether I can claim my deductions as under:
80C – Rs. 150,000 as Tax FD for 5 Years
80CCD(1B) – Rs. 70,000/- (Eligible Amount – Rs. 50,000/-)
80CCD(2) – Rs. 70,000/-
Total deduction – Rs. 270,000/-
Please clarify.
Regards
Mohammad-Correct, but in case of 80CCD(2) refer the conditions mentioned above and then claim accordingly.
Thank you Sir
1. Sir, I am Central Govt. Employee… My Gross Salary is 55,000 and per month NPS deduction is 4,700 this way total deducted amount per year is = 56,400, and I want to invest 1,43,600 (for MF – ELSS, PPF) for year This way I’m Exhausting the Limit of 80C and 80CCD (1B – Additional deduction for NPS which is going to be from the per month deduction by employee), So Can by this was I can avail the total 2,00,000 income tax saving?
2. Or I have to 1,50,000-56,400 = 93,600 contribute to MF and PPF as 56,400 already being counted in 80C? If I follow this I have only option to contribute for NPS – 50,000 additional contribution, But I want to contribute in MF or PPF, So is there any way?
3. I have One doubt as being a govt. employee, Can I contribute all my deduction made in every month at employer lever to declear under 80ccd (1b) and other amount which I can contribute to 80C to maximize my tax saving? and I won’t need to contibute at additional 50,000 under NPS, which I had already covered at primary basis and I can utilized my 1,50,000 limit under 80C for MF through which I can get monty back in 3 year time.
Please provide the related law, Circular which can clear my doubt too.
Afroj-1) Never concentrate on tax saving but accumulating money to your financial goals. Too much investment in tax saving instruments may harm your financial life. Regarding claiming tax benefits, refer my above post properly.
2) Without knowing your financial goals and financial life, it is hard for me to guide.
3) I answered this to in number 1.
I’m focusing on Tax saving as well as on the financial goals, but being single I can invest upto 1,50,000 in income tax saving, so I wan to know wether i can achieve it this way?
Aforj-Identify your goals, then diversify as per the time horizon and finally, when investing, choose products which are tax efficient.
If i claim employers contribution in NPS to 80CCD(2), do i need to include employers contribution in my gross salary also or gross salary will be excluding employers contribution.
example-(hypothetical)
my gross salary- 8lac(gross salary from my salary slips)
Employee contribution- 60K
Employer contribution-60K
Then can i claim 80 CCD(2) ,if
my gross salary will be 8lac or 8.6 lac???????? Pls clarify this doubt
Sanjay-It will not be part of the gross salary.
Hi sir,
Still? I have a doubt about 80ccd2.
Sir we claim tax benefits of employee contribution in 80ccd/80ccd1(b) and it’s the part of gross salary and it’s mentioned in form 16. But employer contribution is no where mentioned in form 16 and in pay roll. Since this employer contribution income is not part of my salary, so can we claim the tax benefits in 80ccd2
Sanjay-You can claim employer contribution under Sec.80CCD(2).
No you can’t claim if it’s not added in your gross salary initially
Hi, I am govt employee. My question is ,can we claim tax benefits in 80ccd2 if employer’s contribution is not added to my gross salary. Or whether employer contribution should be added to our gross salary to avail 80ccd2 ?
Sanjay-Your gross salary does not matter here. You can claim employer benefit under Sec.80CCD(2).
I am a bank employee and had a mandatory NPS deduction of Rs. 54000 approx this financial year. The employer also contributed Rs. 54000 approximately towards my NPS account. Apart from the above I made a voluntary contribution of Rs. 50000 this financial year. I had also made PPF deposit of Rs. 50000 this financial year.
Is it this way with regards to tax:
1) Rs 54000 will be exempted under 80CCD1
2) Rs 54000 will be exempted under section 80CCD2
3) Rs. 50000 will be expempted under section 80CCD1b
4) Rs. 42000 will be exempted under section 80C
So, should i claim a total of Rs. 150000 exemption under section 80C and Rs. 50000 under section 80CCD1b. A total of Rs. 200000 exemtion.
Daljeet-YES.
Sir I initiated subscription of rs 10000 to my nps tier 1 account.( Voluntary) on 26 march 2017. But my account is not credited with unit till now. So my question is 1) how much maximum time needed for fund credit? 2) If they credit fund after 31st march, will i be able to get income tax benefit over this money for this financial year?
Paul-If the money is credited and received by NPS, then they do it before 31st. It may not be reflecting may be due to holiday or processing.
Sir,
Can I claim 80ccd(1b) after getting refund of assessment year 2016 -17
Goutam-I think NO.
Sir do we need to add employer’s contribution to our gross taxable income to claim benefit under 80ccd(2)? if so den wer is the benefit ?we add it n deduct it .isn’t it nullified?
Deepthi-It is your Total Income then you have to show such deductions (Gross Salary will not matter).
“Hence, never be in wrong belief that NPS will ALONE gives you Rs.2 lakh tax benefit.”
Not clear. How can one get Rs 2 lakh tax benefit other than NPS?
Hariharan-Here my point is that there are other instruments through which we can easily fill the gap of Sec.80C. Many of us believe that NPS is the only source to save tax at maximum.
hello sir,
I m a government employee. my investments including lic ppf etc for this fy is appx. 70000/- & mandatory nps contribution is 120000/-. the same amount of 1.2 lakh has been invested by my employer in NPS.
my doubts r as follows:
– can i split my nps contribution as 80000 in ccd1 and 40000 in ccd 1b, so that i can show a total of 1.5 lakhs on 80c & 40000 in ccd 1b?
– is it compulsary to make additional 10000 investment in nps(40000+10000) to claim this deduction under ccd 1b or i can claim any amount upto 50000??
– also, in addition to the 1.9 lakhs deduction that i have such claimed under sections 80 c and 80 ccd 1b, can i also claim 1.2 lakhs(employer’s contribution) under section ccd2? do i need to add this to my gross salary too for claim?
i have never seen any govt. employee taking this benefit under section ccd2. why?
Sonal-1) YES. 2) NO. 3) Yes.
I am a state govt employee from Assam. I have NPS tier I. My mandatory contribution to NPS (10% of Basic plus DA) this year is Rs 56,000 and an equivalent amount is contributed by govt towards my NPS account. My PPF +PLI+LIC investment is Rs. 1.5 lacs. Can I claim tax under 80CCD 1 (B) for my mandatory contribution of Rs 50,000/- ( actual contribution Rs 56000)?
Partha-YES you can.
PLUS 80 CCD (2) UPTO RS. 50 K OUT OF EQUAL AMT OF 56 K CONTRIBUTED BY GOVT. HENCE 1.50 LACS PLUS 50 K PLUS 50 K TOTAL 2.50 L. SINCE HE IS SALARIED PERSON.
Hemant-Sec.80CCD (2) is meant only for salaried. Hence, no need of special reference.
Sir, I have a doubt here. I wanted to be sure if mandatory contribution could be claimed as additional claim under section 80 ccd 1b when the assessed has already made investment of 1.5 lacs in PPF/LIC or other eligible instruments and has mandatory nps deduction on excess of other investments mentioned above. Thus claiming a total of 2.5 lakhs of tax rebate. Please clarify?.
Daljeet-Once you fill up the gap of Rs.1.5 lakh under Sec.80C, then the remaining amount can be claimed under Sec.80CCD(1B) up to Rs.50,000.
give a reply of same question of partha pratim goswami
I have an investment of 1.2 lakhs (80c) and 65000 as my nps contribution can i split 65000 as 30000 in 80ccd(1) and remaining (35000) in 80ccd(1b)
Uma-YES.
I P. KUMAR EMPLOYEE OF JHARKHAND GOV. MY ANNUAL INCOME IS rS 589644 MY 80C DEDUCTION 150000 IS COMPLETE MY NPS DEDUCTION RS 56168 HAVE I GET BENIFIT ADDITIONAL RS 50000 80CCD (1 B) AND HOW MUCH TAXPAYABLE F/Y 2015-17
Pratham-If the invested Rs.56168 is from your pocket (not from your employer), then you will get additional tax benefits. Taxable income can’t be calculated by just sharing annual income.
Dear Basu,
I went through all of the above comments, but I’m still not able to understand that whether I can get tax benefit of 50k under Sec.80CCD (1B) if I invest 50k in NPS. In your post above, you have written that additional tax benefit of up to Rs.50k is eligible for income tax deduction over and above Sec.80CCD (1). So I have two questions here assuming two scenarios.
1. Assuming that I’m availing tax benefit of 1.4lac under various sections of 80C for PPF, EPF, LIC, etc., and have invested 60k in NPS. Should I first get tax benefit of 10k under Sec.80CCD (1) to get tax benefit of additional 50k under Sec.80CCD (1B)?
2. Assuming that I’m availing tax benefit of full 1.5lac under various sections of 80C for PPF, EPF, LIC, etc., and not for NPS under Sec.80CCD (1), can I still get tax benefit of 50k under Sec.80CCD (1B) if I invest 50k in NPS?
My employer isn’t contributing to NPS and I have created NPS account on my own through e-NPS portal.
Thank you for writing informative articles. Have been reading your blog very much lately.
Sri-1) YES.
2) Yes, but only Rs.50,000.
Thank you for the response.
If this is true then there is no need of voluntary nps kind of thing.. That is if we have a mandatory NPS deduction of Rs. 50,000 under NPS mandatory deduction by employer and we already invest 1,50,000 in other eligible 80C instruments apart from NPS category, can we still claim the MANDATORY NPS deduction under Section 80CCD1b even though that has not been a VOLUNTARY CONTRIBUTION and was actually to be accounted for under section 80C had we not exhausted the 150000 limit through other investments. The whole idea of VOLUNTARY NPS CONTRIBUTION goes in vain this way. Please clarify.
Daljeet-Whether it is voluntary or deducted from your salary and contributed to NPS, the overall limit under Sec.80CCD(1) is Rs.1,50,000 (part of Sec.80C) and under Sec.80CCD(1B) is Rs.50,000.
sir,
if my total investment is 147599 in lic + 17600 in children education fees+ 44521 is in nps .my total incom is 494964 please give me detail for computation sheet for incom tax calculation
Bhanu-How can I give you computation without knowing your other details? Also, whether your investment is Rs.1 lakh or Rs.20 lakh, there are certain limits to each section for claiming deduction benefits.
My father wants to transfer 20 lacs as gift to grandson who turned 18yrs in SBI account. SBI manager says better to invest in their Magnum balanced fund instead of FD. Please guide. 5 yrs perspective. Do also suggest long term 10 yrs angle.
sir.. i hv read all the post.. but last time please clear me..
10% amt deducting in my salary for nps contribution i.e 60000 annualy.. ok.. i want to invest 140000 in ppf, lic , suknya yojna and out of 60000 i want to show rs 10000 in 80 c for total 1.5 lakhs and remaining 50000 i wantt to show in 80ccd (1b)… can i do as like that…for total investment of rs 2 lakh.
Navneet-YES.
dear sir, i m a employee of westbengal govt. i will get my pension. ievery year i save 1.5 lacs via 80c . now my question is
1) can I open nps tier 1 ac ? 2) is it for additional 50000 savings? 3) what is the difference btw tier 1 and tier2 and which ll be best
Rudra-1) YES, 2) How can I say that? 3) Refer my post “Difference between Tier 1 and Tier 2 Account in NPS“.
Sir , I have invested 1.5 lac in PPF and 60000 in NPS through employee mandatory contribution . Am i eligible for extra 50000 deduction under 80ccd 1b Because my PSU company saying that NPS emloyee contribution deduction can be availed within 1.5 lac limit and for avaling extra 50000 tax benefit u need to contribute on your own personally. Is that true?
KK-Yes, the contribution must be from your own pocket to NPS, which can be claimed under SEc.80CCD(1B). You can’t claim your employer contribution in this section. Employer contribution can be claimed in Sec.80CCD(2).
Sir yes u r right but I am asking about my contribution which is mandatory .. is that considered in 80ccd 1b ?
KK-Your contribution over and above Sec.80CCD(1) (over and above Sec.80C also) can be shown in Sec.80CCD(1B).
If employer does not provide the facilities of NPS contribution from employer us 80ccd(2) as it is not mandatory/statutory compulsion, what should do employee for getting this benefits?
Solanki-Sec.80CD(2) is only if your employer provides NPS facility. Otherwise, you can’t take benefits of this.
Sir, if I full fill the 80C Limit which is 1,50,000/- through the investment in PPF account.
Can I also get benefit under 80CCD(1B) of Rs.50,000/- for investing NPS account in a Financial year.
Pls clarify if i am wrong.
Arijit-YES.
Sir I have already crossed deduction of rs 150000 under 80c and my compulsory contribution to nps in this fy is 45787 which is showing under 80 ccd. Now if I invest rs 25000 in mps then will it be eligible for exemption of tax under 80ccd 1b or not.i mean can I get total rebat upto 150000+45787+25000 or not. Iam a psu bank employee.
Suman-Over and above of Rs.1,50,000 can be claimed in Sec.80CCD(1B).
Dear sir, I am a Tamilnadu State Government Employee and 10%of my basic+D.A. is deducted for CPS Scheme. Can I claim my CPS under 80CCD(1B). Expecting your reply.
Saravanakumar-CPS stands for?
“Contributory pension scheme ” sir
Saravankumar-I am not sure of which scheme it is. Can you name specifically?
Dear sir, “CPS” IS CONTRIBUTORY PENSION SCHEME IMPLEMENTED BY TAMILNADU STATE GOVERNMENT FROM 2004 FOLLOWED BY CENTRAL GOVERNMENT GUIDELINES
Saravankumar-I am not aware about the feature of this product.
However, thanks for your immediate response sir.
Dear Basu,
I am a salaried employee with public limited co in Mumbai. My company offered for NPS in the month of Apr-16 but i have not opted for the same since I was not clear as regards the NPS Rules. Now I want to invest in NPS but my employer says I can invest from next year only.
my questions are
1. Can I invest Rs. 50,000 in current year by opening NPS A/c say with HDFC and from next year with my employer from monthly salary?
2. Which account Will be treated as Tier-1 and Tier-2 i.e. A/c Opened with HDFC or Opened with Employer.
3. What will be the lock in for the account.
Please advice.
Ankit-1) Yes, but provide the same NPS account number to your employer.
2) Understand the difference about Tier 1 and Tier 2 at “Difference between Tier 1 and Tier 2 Account in NPS“.
Hi Basu,
kindly make correction for following on your this same page –
NPS Tax Benefits under Sec.80CCD (2)
•The deduction under this section will be eligible for self-employed
it should be NOT eligible.
Hemant-Thanks and updated the error.
If I invest 37000/- in nps (tier 1 )80CCD (1)B what about slab? Can I take benefits of Rebate under u/s 87A of Rs 5000
Jadhav-Section 87A is related to total income of Rs.5 lakh or more and deduction there available is Rs.5,000 if your income is less than Rs.5 lakh. Why you want to connect that to this investment?
Sir,
I have a small problem.
I already have an investment of 60000 in NPS and 90000 in PPF.
Now, in order to claim 1.7 lacs exemption benefit, can I invest 20,000 more and claim 20000 in 80CCD(1)(b)?
I meant 20,000 more in NPS
Nitin-Yes, you can do so.
I am a central govt employee for past 20yrs. I am investing around 1.5 lakh in general provident fund (gpf). I am not claiming any deduction u/s 80ccd1. Am I eligible to claim deduction u/s 80ccd(1B) of rs.50000/-.
Harsha-NO.
is it that any person claiming u/s 80ccd1 is only eligible to claim 80ccd(1b). Please explain
Harsha-It is only for NPS.
Hi Basav,
I have a total investment of 1.3 lakhs from my LIC, PPF etc which come under 80c. I have a total of 80000 invested in NPS. So my total investment is 2.1 lakhs. Now can I split my NPS contribution between 80c and 80ccd(1B) that is 1.3 lakhs(Excluding NPS) + 20000(NPS)to make 1.5L under 80C and the remaining 60000(NPS) under 80ccd(1B) to make use of full limit of 2 lakhs exemption limit?
Thanks.
Sachin-Yes, you can split so. But the maximum limit under Sec.80CCD(1B) is Rs.50,000 ONLY.
Ok.. Thanks a ton for your help…
Dear Sir,
Good article.
I have invested 1.5L under 80 CCE( PF + Tuition fees)
My company provided 80 CCD(2) NPS contribution. So invested Rs 52000 under it
Now I can apply Rs50000 more in 80CCD(1B)..right?
But My company(TCS) puts a rule that we can declare 50K under 8CCD(1B) only when we have already invested 1.5L in NPS under 80CCD(1). This is not feasible as only 10% of basic is eligible for 80CCD(1) and no one will have 15L basic to be eligible for 1.5L in 80CCD(1).
Is there any conditional rule of exhaustion of any other rule to use 50K deduction under 80CCD(1B)?
Karthik-Yes, you can claim additional investment under Sec.80CCD (1B). There is no such rule that one must invested Rs.1.5 lakh under Sec.80CCD (1), then only they can show the investment in Sec.80CCD (1B). Moreover, it is not your employer headache, but it is purely your own personal. Who they are to guide you on this matter?
Sir, for my query in this question-
Will karthik get total Rs. 2.52 lacs exemption under all 3 sections of NPS -( 52 k of employer also ) ?
kindly reply Basu sir.
Hemant-Be specific with the query. I can’t go back individual comments and answer. Hence, let me know what is your exact doubt. I will definitely clarify.
Basu sir,
my query is for right this point only of Karthik –
Karthik says:
November 3, 2016 at 12:59 PM
Will karthik get total Rs. 2.52 lacs exemption under all 3 sections of NPS -( 52 k of employer also ) ?
kindly reply Basu sir.
Hemant-I already replied saying YES. Because there is no such rule that one must first fulfill Sec.80C to avail the tax benefits under remaining two sections.
HI Nivesh,
I have one doubt regarding NPS
For example my basic and DA is 50000 ,So my PF amount exemption is 72000, and I contributed NPS 10% on my basic through 8CCD(1) so total amount of exemption is 122000 through 80C ,again i contributed 50000/- Rs through 8CCD(1B).
Now my question is this possible to again contribute 10% on my basic amount through 8CCD(2).(or its need to be included into my CTC).
IF it is possible how they will deduct 10% on my basic at time (80CCD1 and 80CCD2 )
Please explain,
thanks in advance
Kiran-Sec.80CCD(2) will not be from your own pocket, but it must be from your employer. Check the details properly as written in above post.
Thanks for the reply Nivesh.
Hi Basav,
Suppose, my total mandatory contribution to NPS (employee contribution of 10%) is 75000. Can I claim 25000 in 80C and 50,000 in 80CCD(1B) because i want to claim a rebate of 1,25,000 on tax saving MFs??
I mean do i have that choice to decide in such cases ?
Dinesh Jain
Dinesh-You can split so between Sec.80CCD (1) for Rs.50,000 and Rs.25,000 in Sec.80CCD (1B). Only keep in mind that the same amount can’t be claimed for exemption in two different sections of IT act.
Good one.
Sabharish-Thanks.
It’s always beneficial to read ur articles
Mandeep-Pleasure 🙂
My 80c limit is exhausted with investment over 1.5 Lakhs, I am doing additional investment in NPS on my own (personal).
Can it be qualified for 80 CCD 1 (B) or does I require anything to get my NPS investment qualify for 80 CCD 1(B)?
Ankit-You can claim the additional NPS investing in Sec.80CCD (1B) up to Rs.50,000.
Hi Basavaraj
A doubt related to above 80CCD topic, Even Atal Pension Yojana scheme also comes under 80CCD Rite ?
I had read in news.
My current employer has rejected my tax filing under 80CCD , saying APJ doesnt come under tax deduction.
Searching for notifications related to it by incometax department
Deepak-Show them this Govt Notification. Under 2.3 it is clearly mentioned that APY tax benefits are same as that of NPS. What more proof they need?
Thanks Basavaraj !!!
Have attached the same document shared above and sent mail to finance team.
Deepak-They must accept it. Otherwise, you can file the IT return on your own.
Basu Sir,
you are extremely helpful, resourceful and very fast, kindly keep it up.
Nice article
Balvant-Pleasure 🙂
Sir ,I am state govt employee my NPS contribution is 60000 ,can I claim 10000 in 80 c and remaining 50000 For additional benefits 80ccd
Dear Pragati,
Yes if your Sec.80C limit got exhausted.