Sec 80CCD – Deduction for contribution towards NPS

Written by Ravi Sankar Robbi

Updated on:

Self-contribution: Any contribution by an individual# towards National Pension System (NPS) is eligible for deduction upto 10% of salary* (if individual is an employee) or 20% of gross total income (if individual is self-employed) – Sec 80CCD(1)

Employer contribution: Any contribution by the employer towards National Pension System (NPS) for the benefit of employee is also eligible for deduction in the hands of employee upto 10% of salary in addition to the above – Sec 80CCD(2)

Additional deduction for individual contribution:  An additional deduction upto Rs. 50,000 is available to the assesse for the contribution made by such assesse within the overall limit of 10% of salary or 20% of gross total income – Sec 80CCD(1B)

Key point: Ceiling limit of Rs. 1,50,000 specified in Sec 80CCE is NOT applicable for deductions under Sec 80CCD(2) & Sec 80CCD(1B) specified above.

# Individual can be an employee or self-employed.

*Salary includes “Basic + DA which forms part of retirement benefits + Commission as a fixed % on turnover”.

Author is a Qualified CMA with an experience of more than 8 years in the industry. He is also an All India Rank holder in both Inter (AIR-26) & Final (AIR-46) examinations of ICAI. He loves to writes articles on Income Tax & GST.

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