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I work with a govt financial institution and I have enrolled in National Pension Scheme (NPS) . For the assessment year (AY) 2016-17, I have done investment in Public Provident Fund (PPF) of ₹1.5 lakh. My NPS contribution and my employer's contribution in NPS is around ₹70,000. In the projected income tax sheet given by accounts department, my overall deductions is shown as ₹1.5 lakh and the company's contribution of ₹70,000 under section 80CCD(2), whereas my contribution is shown under Section 80CCD(1), which is not counted as a part of overall deductions. I want to know whether my contribution towards NPS can be shown under section 80CCD(1B) so that I can avail rebate of up to ₹50,000? If employer is persisting is it possible to show it under Section 80CCD(1) and get a refund while filing of income tax? If possible, share the relevant clause of income tax.
- Panda Bhai
Your contribution to National Pension Scheme (NPS) is covered under Section 80CCD(1). However, you are free to claim your contribution under Section 80CCD(1B) and claim a tax deduction of up to ₹50,000 on it. However, you cannot claim a total tax deduction of more than ₹2 lakh under both Section 80C and 80CCD in a year. In your case, you have exceeded the total tax deduction permitted this year. Your have invested ₹2.2 lakh (₹1.5 lakh in PPF and ₹70,000 in NPS), whereas you can claim only ₹2 lakh as a tax deduction. You can claim ₹1.5 lakh under Section 80C on your PPF investment and ₹50,000 under Section 80CCD(1B). Your employer's contribution is covered under Section 80CCD(2) and it is over above the Section 80C limit.
This article was originally published on March 14, 2016.
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