NPS Contribution under New Section

I am working with a leading PSU since July 2013. My own contribution towards NPS is ₹5,000 per month with matching contribution from the company. Until last year, I used to claim my contribution to NPS u/s 80CCD(1). Any shortfall in u/s 80C was invested in ELSS of Axis and Reliance Mutual Fund. In the current financial year, the government has come up with a New Section of 80CCD(1b) for additional investment of ₹50,000/- in NPS. In that case, can I claim ₹50,000/- U/s 80CCD(1b), residual ₹10,000/- [(5,000*12)-50,000] U/s 80CCD(1) and the rest under Section 80C (₹1,40,000) in ELSS, with overall tax deduction of ₹2 lakh.
- Aman Baranwal

There seems to be some confusion in the financial community regarding this. However, as per our understanding, you can invest ₹60,000 per annum in NPS, and claim ₹50,000 under section 80CCD(1B) and ₹10,000 under section 80CCD(1). You can still claim an extra deduction of ₹1.4 lakh under section 80C by making suitable investments permitted under the section.

This article was originally published on August 28, 2015.