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80 ccd(1b) help

NIPUN BHATIA (student) (25 Points)

04 January 2016

CAN ANYONE PLEASE EXPLAIN ME THE LALTEST AMANDMENT IN 80CCD , IN PROVISION 80CCD(1B)???

THANKS IN ADVANCE

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11 Replies

Sonu Goenka (Professional) (62 Points)
Replied 04 January 2016

Earlier the deduction allowed for contribution to NPS was limited to Rs. 1 Lakh [Sub Section 1A of Section 80CCD]. Now the maximum amount allowed to be invested in National Pension
Scheme has been increased from Rs. 1 Lakhs to Rs. 1.5 Lakhs.
In the Budget 2015 a new subsection 1B has also been introduced so as to provide for
additional deduction in respect of any amount paid, of upto Rs. 50,000 for contributions made by any Individual assessees under NPS.
This additional benefit of Rs. 50,000 is over and above the benefit of Rs. 1.5 Lakhs allowed to be claimed as a deduction under Section 80C. Therefore, now the total deduction that can be claimed under Section 80C + Section 80CCD = Rs. 2 Lakhs

1 Like

Ankit Taprania (CA FINAL ) (542 Points)
Replied 04 January 2016

i agree , in addition to that let me explain .

80CCD has 3 parts . only contribution under 80CCD(1) will be counted for 150000 and can be maximum to 10% of salary

Any contribution made in 80CCD(2) and 80CCD(1B) will not counted for 150000. However max contribution in 80CCD(1B) can be 50000 only.

now since 80CCD(1B) is not counted in 1,50,000 of 80CCE , first 50000 of contribution in NPS is prefered to be claimed in 80CCD(1B) and balance in 80CCD(1)

Now consider this example :

salary =12,00,000 and say you have deposited rs 55000 in PPF, 30000 as LIC premium and contributed RS 120000 in NPS of central govt . solution :

Taxable salary ( assume whole) = 12,00,000

Deductions:

80C ( 55000 + 30000 ) 85,000

80CCD(1) (1,20,000 - 50,000) 70,000 ( max =10% of salary)

1,55,000

80CCE 155000 RESTRICTED TO = 1,50,000

80CCD(1B) CONTRIBUTION TO NPS = 50,000 2,00,000

TOTAL INCOME 10,00,000

TAX LIABILITY (as per slab rate ) 1,28,750

1 Like

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 04 January 2016

Wherefrom -50000 as above has come.

Tony John (Chartered Accountant) (6085 Points)
Replied 04 January 2016

Rs.50,000 is taken separately in Sec 80CCD(1B) and not in Section 80CCD(1) in order to maximize the benefit extended by these sections. Had Rs.50,000 not been reduced from Rs.1,20,000, the deduction u/s 80CCD(1) would have been restricted to 65,000 (1,50,000-85,000).

Hence Rs.50,000 is reduced in Section 80CCD(1) and considered separately in Section 80CCD(1B).

Let Ankit ji also comment.

1 Like

Ankit Taprania (CA FINAL ) (542 Points)
Replied 04 January 2016

Absolutely correct Tony ,

see Rajesh ji , 80CCD(1B) gives you the benfit of claiming first 50000 of contribution in NPSin 80CCD(1B) because it is not restricted by the limit of Rs 1,50,000 of 80CCE

AND and balance in 80CCD(1) which is restricted by 1,50,000

so i am claiming 1,20,000 contribution in this manner:

1. first 50,000 in 80CCD(1B)

2 BALANCE in 80CCD(1)

OTHERWISE if we claim whole 120000 in 80CCD(1) we will get deduction of rs 65,000 only as explained by Tony John ji.

2 Like

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 04 January 2016

Let me explain the provisions with an example, salary 18 lacs, employee's contribution 1.8 lacs (10% of salary) but restricted to 1.5 lacs u/s 80cccd(1). If he wants additional deduction u/s 80cccd(1b) he has to invest another 50000. His overall own contribution in that case will be 2.3 lacs. Another case salary 12lacs. Own contribution @ 12% (say) is 1.44 lacs, but eligible only 1.2 lacs (10%).He has to invest in this case 1.94 lacs to avail benefits u/s 80ccd(1b).

Ankit Taprania (CA FINAL ) (542 Points)
Replied 05 January 2016

yes,

BUT POINT TO BE NOTED here rajesh ji ,

you are coming to such huge amounts because you are considering only NPS for 150000 of 80CCE.

when you also consider LIC premium , PPF, NSC, FD deposit, principal repayment of home loan ,tution fee, medical insurance premium , then you will see , you only have to deposit rs 50,000 in NPS to avail the benifit of 80CCD(1B), because the whole exemption limit of 1,50,000 will get exhuasted by these things.

2 Like

Ramanuj (Accountant.) (834 Points)
Replied 05 January 2016

Agree with Mr. Ankit ji pointed to noted.

Thanks & regards

ramauj

Inder Jit (1 Points)
Replied 07 February 2016

Sir i m a punjab state employee.my savings in ppf+lic=150000

There is 45000 annual( 10% deduction) from my salary.

So what rebate can i get for i.tax

1.only 150000

2. 150000+45000=195000?

Sir; please rply

Ankit Taprania (CA FINAL ) (542 Points)
Replied 08 February 2016

Originally posted by : Inder Jit
	Sir i m a punjab state employee.my savings in ppf+lic=150000There is 45000 annual( 10% deduction) from my salary.So what rebate can i get for i.tax1.only 150000Or2. 150000+45000=195000?Sir; please rply

You will be allowed deduction in this manner:

80C = 1,50,000

80CCD(1B) = 45,000

TOTAL = 1,95,000

CA Mohit Garg (CS Student) (213 Points)
Replied 25 March 2016

Originally posted by : Ankit Taprania
	Originally posted by : Inder Jit Sir i m a punjab state employee.my savings in ppf+lic=150000There is 45000 annual( 10% deduction) from my salary.So what rebate can i get for i.tax1.only 150000Or2. 150000+45000=195000?Sir; please rply You will be allowed deduction in this manner: 80C = 1,50,000 80CCD(1B) = 45,000 TOTAL = 1,95,000

Ankit Ji,

Amount deducted by govt. i.e employer will be consider under 80CCD(1) or 80CCD(1B). Because there is dilema on this matter. Some has said in 80CCD(1b) only that amount will be consider which is deposted by emplyee on own i.e. in addition to deduction made by the employer. Please comment.