I am a central government employee. I have invested ₹1.5 lakh in Public Provident Fund (PPF). I also contribute around ₹72,000 per year to National Pension System (NPS). The government, my employer, also contributes a matching amount. I want to know whether I can claim my PPF investment of ₹1.5 lakh under Section 80C and the additional ₹50,000 under Section 80CCD(1) on my contribution to NPS?
- Mukesh Sah
An employee's 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 80CCD(2) over and above the limit of ₹1.5 lakh provided under Section 80CCE. As per the last Budget, an additional tax deduction of up to ₹50,000 can be claimed under Section 80CCD(1B) on investments in NPS. However, the aggregate amount of deduction under section 80C, 80CCC and 80CCD(1) cannot exceed ₹1.5 lakh.
That means you can claim a total tax deduction of ₹2 lakh like this: Your contribution to NPS is ₹72,000. You can claim a deduction of ₹50,000 under section 80CCD(1B) and ₹22,000 under section 80CCD(1). The remaining ₹1.28 lakh (₹1.5 lakh - ₹22,000) can be claimed under section 80C on your investment in PPF.
This article was originally published on November 27, 2015.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
