Deductions u/s 80C, CCC, NPS (CCD 1B, CCD(2))

3 Nov 2022

Deductions u/s 80C, CCC, NPS (CCD iB, CCD(2))


Various deductions are provided by income tax department for saving of taxes under chapter VI A deduction. These deductions are provided for making tax saving investments and tax saving expenditure. These will also result in creating saving habits. There are various sections are incorporated by income tax department under which deductions are provided such as 80C, 80CCC, 80CCD, 80E etc. Each section has its own benefits for tax savings. Limit of amount of deduction allowed is provided by each section separately. Any changes in the respective section will be presented in union budget by finance minister.


Deduction u/s 80C:


Majority of taxpayer are claiming the deduction under 80C as the scope of this section is very wide. 80C allows deduction for investment made in PPF , EPF, LIC premium , Equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya smriddhi yojana (SSY) , National saving certificate (NSC) , Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds etc.



Deduction u/s 80CCC:



Taxpayers who make payments or deposits towards purchase of any annuity plan of public insurance company such as LIC or other insurance companies can claim tax deduction u/s 80CCC. To claim this tax benefit, the individual must have made payments to receive pension from a fund, which is referred to under Section 10 (23AAB). However, the proceeds from the policy - be it bonus or interest accrued - stand to be taxed during the year of receipt. Maximum amount of deduction is 1,50,000 which will be covered u/s  80C.


Deduction u/s 80CCD (1) Employee’s contribution to NPS:


Employee’s contribution under section 80CCD (1) Maximum deduction allowed is least of the following

 

  • 10% of salary (in case taxpayer is employee) ·    

  • 20 % of gross total income (in case of self-employed) ·     

  •  Rs 1.5 Lakh (limit allowed u/s 80C)

 

However, the maximum deduction a taxpayer can avail benefit is Rs 1,50,000 which will covered u/s 80C.


How to make the Investment to avail the Tax Benefit:

If you are an existing Subscriber, you can approach any POP-SP or alternatively you can visit eNPS website (https://enps.nsdl.com) for making additional contribution in your Tier I account.


Deduction u/s 80CCD (1b) Contribution to NPS

 

Additional deduction upto Rs 50,000 is allowed for contribution to NPS 80 CCD(1b).

Contribution to Atal Pension Yojana is also eligible for deduction.


80CCD (2) Contribution to Pension Scheme by Employer



Under Section 80CCD(2) an employer can make contribution to NPS in addition to those made towards PPF and EPF. Deduction under this section can be claimed over and above those section 80CCD (1). Section 80CCD (2) will applies only to salaried individual and not on self-employed individual. Maximum deduction that can be claimed under Section 80CCD (2) will be up to 10% of their salary (basic pay+ dearness allowance) or equal to the contributions made by the employer towards the NPS.

Riteek Jain