I am working in a central government organization since July 2010. My own contribution towards NPS is ₹6,000 per month with equal contribution from the employer. Until last year, I used to claim my contributions to NPS under section 80CCD(1) (Total ₹72000/year). Any shortfall under Section 80C was invested PPF & ELSS (Axis MF, SBI MF). 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), remaining ₹22,000/- [(6,000*12)-50,000] U/s 80CCD(1) and the rest under Section 80C (₹1,28,000) in PPF & ELSS, with overall tax deduction of ₹2 lakh.
My second quesion is that as I allready investing in ELSS (Axis MF, SBI MF) since 2010, can I take advantage of investing ₹. 50,000 in RGESS mutual fund together with ELSS?
- Rashmi
You can claim a total deduction of ₹2 lakh under both Section 80C and Section 80CCD. It is entirely up to you to how you want to claim a deduction on your NPS contribution. You can claim ₹50,000 under Section 80CCD(1B) and the remaining money can be part of the ₹1.5 lakh you wan to claim.
Rajiv Gandhi Equity Saving Scheme or RGESS is meant for new investors to the stock market who have never traded in equity through a demat account. However, investors in equity mutual schemes and those holding physical share certificates are eligible to invest in RGESS. That means if you have never invested in stocks through a demat account, you can claim deductions on investments under both Sections. Investments in RGESS are capped at R50,000 per individual, with a tax deduction of 50 per cent on the amount invested.
This article was originally published on January 19, 2016.
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