I have a very basic doubt regaring NPS tax claim, lets consider the following sceanrio
Total Salary : 700000
Deductions under 80C(LIC, PPF,...): 150000
Contribution towards NPS 80CCD: 50000
Total deductions : 200000
Net Taxable income : 500000
Is my above calculation correct?. If i contribute 50k into NPS per year, will i be able to claim in under 80CCD(1B) directly?
Yes, correct. Employee's contribution from salary is deductible in section 80CCD(1). This contribution along with Sec 80C has 1.5 Lakh investment limit for tax deduction. So, if Employees have savings Rs. 1,50,000 under 80C excluding NPS Deductions, then the Employee can show their NPS Deductions, under 80 CCD(1B), which is over the 1,50,000 Limit.
CAclubindia
