Deduction
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
17 December 2015
I would like to know additional deduction of Rs. 50000/- is eligible only if employee contribute or it is eligible after 1.5 lacs + NPS (both employee + employer contribution) = 2 Lacs
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 December 2015
Nobody answering...???
20 July 2024
The additional deduction of Rs. 50,000 under Section 80CCD(1B) of the Income Tax Act is available specifically for contributions made towards the National Pension System (NPS). Here’s how it works:
1. **Section 80C Limitation**: The overall limit under Section 80C for deductions is Rs. 1.5 lakh. This includes various investments such as EPF, PPF, life insurance premiums, ELSS mutual funds, etc.
2. **Additional Deduction under Section 80CCD(1B)**:
- In addition to the Rs. 1.5 lakh limit of Section 80C, an individual can claim an additional deduction of up to Rs. 50,000 for contributions made towards NPS Tier-I account.
- This deduction is available to both salaried individuals and self-employed individuals.
- The contribution can be made by the individual taxpayer (employee) towards their own NPS account.
3. **Employer Contribution**: Employer contributions to an employee's NPS Tier-I account also qualify for deduction under Section 80CCD(2), which is over and above the limits of Section 80C and the additional Rs. 50,000 deduction.
**Clarification on Eligibility**:
- **For Employees**: The additional deduction of Rs. 50,000 (Section 80CCD(1B)) is available to the individual taxpayer (employee) who contributes to their own NPS account. This is in addition to the Rs. 1.5 lakh limit of Section 80C.
- **For Self-Employed**: Self-employed individuals can also claim the additional deduction of Rs. 50,000 under Section 80CCD(1B) for contributions made to their NPS account.
**Example**:
- If an individual contributes Rs. 1.2 lakh to EPF and PPF (covered under Section 80C), they can additionally contribute Rs. 50,000 to their NPS Tier-I account and claim a deduction under Section 80CCD(1B).
- Therefore, the total deductions under Section 80C and 80CCD(1B) can amount to Rs. 2 lakh (Rs. 1.5 lakh under Section 80C + Rs. 50,000 under Section 80CCD(1B)).
**Conclusion**:
The additional deduction of Rs. 50,000 under Section 80CCD(1B) is specifically for contributions made towards the NPS Tier-I account by the individual taxpayer (employee or self-employed). It is not contingent upon employer contributions and is available in addition to the Rs. 1.5 lakh limit of Section 80C. Therefore, to maximize tax benefits, individuals can contribute up to Rs. 2 lakh (Rs. 1.5 lakh under Section 80C + Rs. 50,000 under Section 80CCD(1B)) towards specified investments and contributions.
1. **Section 80C Limitation**: The overall limit under Section 80C for deductions is Rs. 1.5 lakh. This includes various investments such as EPF, PPF, life insurance premiums, ELSS mutual funds, etc.
2. **Additional Deduction under Section 80CCD(1B)**:
- In addition to the Rs. 1.5 lakh limit of Section 80C, an individual can claim an additional deduction of up to Rs. 50,000 for contributions made towards NPS Tier-I account.
- This deduction is available to both salaried individuals and self-employed individuals.
- The contribution can be made by the individual taxpayer (employee) towards their own NPS account.
3. **Employer Contribution**: Employer contributions to an employee's NPS Tier-I account also qualify for deduction under Section 80CCD(2), which is over and above the limits of Section 80C and the additional Rs. 50,000 deduction.
**Clarification on Eligibility**:
- **For Employees**: The additional deduction of Rs. 50,000 (Section 80CCD(1B)) is available to the individual taxpayer (employee) who contributes to their own NPS account. This is in addition to the Rs. 1.5 lakh limit of Section 80C.
- **For Self-Employed**: Self-employed individuals can also claim the additional deduction of Rs. 50,000 under Section 80CCD(1B) for contributions made to their NPS account.
**Example**:
- If an individual contributes Rs. 1.2 lakh to EPF and PPF (covered under Section 80C), they can additionally contribute Rs. 50,000 to their NPS Tier-I account and claim a deduction under Section 80CCD(1B).
- Therefore, the total deductions under Section 80C and 80CCD(1B) can amount to Rs. 2 lakh (Rs. 1.5 lakh under Section 80C + Rs. 50,000 under Section 80CCD(1B)).
**Conclusion**:
The additional deduction of Rs. 50,000 under Section 80CCD(1B) is specifically for contributions made towards the NPS Tier-I account by the individual taxpayer (employee or self-employed). It is not contingent upon employer contributions and is available in addition to the Rs. 1.5 lakh limit of Section 80C. Therefore, to maximize tax benefits, individuals can contribute up to Rs. 2 lakh (Rs. 1.5 lakh under Section 80C + Rs. 50,000 under Section 80CCD(1B)) towards specified investments and contributions.
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