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What is Deduction under section 80CCD?

It is a scheme introduced to cultivate a habit to save money for pension. It is available to any person between the age group of 18-65 years. It is the equity-linked investment option in the market. The minimum investment in NPS could be Rs.1000 whereas there are no limits for Upper Cap. Since it is a market driven Investment fund, NAV of the fund needs to be considered while making investments. The higher the contribution one makes towards the scheme, higher is the retirement corpus. Moreover, an advantage of the power of compounding makes NPS a more lucrative option.

Special benefits on contribution by corporates under NPS

One may register on https://enps.nsdl.com/eNPS/OnlineSubscriberRegistration.html?appType=main for Individual there is also an option to register as corporate under which a single payment for all employee can be made.

One may refer to https://www.npscra.nsdl.co.in for further detailed info.


Tax incentives under Scheme

Deduction under 80CCD(2) is for Contribution by employer whereas 80CCD (1) & (1B) deal with contribution by employee or self employed person.


Deduction under 80 CCD (1) is restricted upto 1.5 Lakh (The cap of 1.5 lakh is including 80C as 80CCE). Deduction under 80CCD(1B) provides an extra deduction over and above the cap limit mentioned in 80CCE.

Furthermore an employer can contribute 10% of basic pay & Dearness Allowance (14% in case of Govt employees) which can also be claimed as deduction for Business Expense and the same would also be available to employee as deduction so basically a double benefit is enjoyed for a single expense.

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Category Income Tax, Other Articles by - Heet Shah