An employee is eligible for tax deduction of up to 10 per cent of his salary contributed by the employer under Section 80CCC(2)
08-Oct-2015 •Research Desk
I am an employee of Gujarat government. I contribute 10 per cent of my salary to NPS account as an employee. It comes to around ₹51,867 in the financial year 2015-16. I include this amount in my investments of up to ₹1.5 lakh permitted under Section 80C. I come to know from the Income Tax website tax calculator that the contribution of employer is also deductible in addition to the employee's contribution. For example, my contribution as an employee is ₹51,867 and employer's contribution is ₹51,867, it qualifies for a total deduction of ₹1,03,734. Is it true?
- Mitesh Kholiya
An employee's own contribution is eligible for tax deduction of up to 10 per cent of his salary (basic + DA) under Section 80CCD(1) within the overall ceiling of ₹1.5 lakh under Section 80CCE. The employee is also eligible for tax deduction of up to 10 per cent of his salary (basic + DA) contributed by the employer under Section 80CCC(2) over and above the limit of ₹1.5 lakh provided under Section 80CCE. As per the last Budget, an additional ₹50,000 over and above ₹1.5 lakh is exempt from taxes if invested in the NPS.
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