I am a public sector bank employee.I have already exhausted my Section 80C limit of ₹1.5 lakh: ₹60,000 in Equity Linked Savings Schemes, ₹80,000 in Public Provident Fund, and ₹22,000 in Life Insurance Corporation of India plans. There is also a deduction of 10 per cent of my salary (Basic plus DA), amounting to a total of ₹45,267, for National Pension Scheme (NPS), matched by an equal contribution from my employer. Can I claim this ₹45,267 deduction under 80CCD(1B) or will it come under 80C?
- Arpita
An employee's contribution to National Pension Scheme (NPS) is covered under Section 80CCD(1) of the Income Tax Act. An individual can also contribute to NPS and claim an extra deduction of up to ₹50,000 under Section 80CCD(1B). However, if you are contributing to NPS you can claim a total deduction of ₹2 lakh under Section 80C and Section 80CCD.
It is up to the taxpayer to decide how he wants to claim the deduction on his contributions to NPS. In short, you can claim a deduction on your contribution to National Pension Scheme (NPS) under Section 80CCD(1B) of the Income Tax Act.
This article was originally published on February 11, 2016.
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