Investment in National Pension Scheme (NPS) Under Section 80CCD Extra Tax Benefit Under The IT ACT, 1961 by Investment in National Pension Scheme (NPS) Under Section 80CCD

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The Tax Publishers Extra Tax Benefit Under The IT ACT, 1961 by Investment in National Pension Scheme (NPS) Under Section 80CCD T.N. Pandey section 80CCD(1B) provides for extra deduction of Rs. 50,000 over and above Rs. 1,50,000 that is available under Section 80C. The learned author explains the scheme of Section 80CCD from investors point of view under the Nation Pension Scheme (NPS). He observes the NPS is a good scheme, but its irksome aspects need to be fine-tuned to make it more popular and acceptable, more so when it is, inter alia, for fixed income group persons. 1. Introduction Section 80C of the Income Tax Act, 1961 (Act) provides for deduction upto Rs.1.50 lakh from the taxable income computed in a previous year in respect of amounts actually paid or deposited by an assessee, who is an individual or Hindu Undivided Family in specified channels such as by payment of insurance premia, deferred annuity contributions, to provident fund, subscription to certain equity shares or debentures, etc., specified in the section However, in view of Section 80CCE, the amount of Rs.1.50 lakh is to be reckoned with Sections 80CCC (deduction in respect of pension funds of LIC and other insurance companies for annuities) and 80CCD (deduction in respect of contribution to National Pension Scheme (NPS) applicable to employees of Central Government, any other person or by assessees, who are self-employed). 2. Extra deduction of Rs.50,000 under section (1B) of Section 80CCD Sub-section (1B) was inserted in Section 80CCD by the Finance Act, 2015 w.e.f. 1-4-2016. This sub-section provides for an additional deduction upto Rs.50,000, over and above Rs.1,50,000, for the AY 2016-17 and the AY 2017-18, the eligible person can claim deduction upto Rs.2,00,000 with the following break-up :-- -- Rs. 50,000 under Section 80CCD(1B) -- Rs. 1,50,000 under Section 80C and 80CCD However, the deduction under Section 80CCD under sub-section (1) or (1B) of this section is subject to certain incentives and disincentives as contained in sub-sections (1) to (5) of this section, which are elaborated in later paragraphs. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Extra Tax Benefit Under The IT ACT, 1961 by Investment in National Pension Scheme (NPS) Under Section 80CCD

T.N. Pandey

section 80CCD(1B) provides for extra deduction of Rs. 50,000 over and above Rs. 1,50,000 that is available under Section 80C. The learned author explains the scheme of Section 80CCD from investors point of view under the Nation Pension Scheme (NPS). He observes the NPS is a good scheme, but its irksome aspects need to be fine-tuned to make it more popular and acceptable, more so when it is, inter alia, for fixed income group persons.

1. Introduction

Section 80C of the Income Tax Act, 1961 (Act) provides for deduction upto Rs.1.50 lakh from the taxable income computed in a previous year in respect of amounts actually paid or deposited by an assessee, who is an individual or Hindu Undivided Family in specified channels such as by payment of insurance premia, deferred annuity contributions, to provident fund, subscription to certain equity shares or debentures, etc., specified in the section However, in view of Section 80CCE, the amount of Rs.1.50 lakh is to be reckoned with Sections 80CCC (deduction in respect of pension funds of LIC and other insurance companies for annuities) and 80CCD (deduction in respect of contribution to National Pension Scheme (NPS) applicable to employees of Central Government, any other person or by assessees, who are self-employed).

2. Extra deduction of Rs.50,000 under section (1B) of Section 80CCD

Sub-section (1B) was inserted in Section 80CCD by the Finance Act, 2015 w.e.f. 1-4-2016. This sub-section provides for an additional deduction upto Rs.50,000, over and above Rs.1,50,000, for the AY 2016-17 and the AY 2017-18, the eligible person can claim deduction upto Rs.2,00,000 with the following break-up :--

-- Rs. 50,000 under Section 80CCD(1B)

-- Rs. 1,50,000 under Section 80C and 80CCD

However, the deduction under Section 80CCD under sub-section (1) or (1B) of this section is subject to certain incentives and disincentives as contained in sub-sections (1) to (5) of this section, which are elaborated in later paragraphs.