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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.
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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