Section 80CCD 1b

Hi,

What is section 80CCD (1b)? How its useful for individuals?

Please suggest

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It provides tax deductions to income tax assessees who have made contributions to NPS. It is of two parts
Section 80CCD (1): This section deals with providing tax deductions to all assessees whether employed by the government, any other employers or self-employed individuals. The deduction is limited to a maximum of 10% of salary (basic + dearness allowance only) in case of salaried employees and 10% of gross income in case of self-employed taxpayers. The deduction limit cannot exceed Rs.1 lakh in a fiscal year.

Section 80CCD (2): This section deals with the employer contribution toward an employee’s NPS funds. Employees can claim this amount as deductions u/s Section 80CCD (2). The amount of deduction is limited to 10% of the employee’s salary

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Section 80CCD1B of the Income Tax Act was brought into the ambit of section 80 CCD with effect from April 1, 2016. According to the Income Tax Act, all individuals who are eligible for claiming tax deduction under section 80CCD 1 can claim an additional deduction of Rs 50,000 for their contribution to pension schemes.

Section 80 CCD(1B) : The 80CCD1B limit is Rs 50,000. This is an additional benefit.

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Section 80CCD of the income tax act deals with deductions offered to individuals contributing to the NPS. As per Section 80CCD, until the year 2015, an individual was eligible to claim an income tax deduction of up to Rs. 1 lakh against contributions made to the NPS. In the budget for the year 2015, the government enhanced the maximum amount payable to the NPS to Rs. 1.50 lakh per annum. Additionally, a new sub-section 1B was also introduced, which offered an additional deduction of up to Rs. 50,000/-for contributions made by individual taxpayers towards the NPS.

The additional deduction of Rs. 50,000/- under Section 80CCD(1B) is available to assess over and above the benefit of Rs. 1.50 Lakhs available as a deduction under Sec 80CCD(1). Thereby, raising the maximum limit of exemption to Rs. 2.00 Lakhs with Section 80CCD(1) + Section 80CCD(1B).

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Hi @RamyaV

This is a sub section as explained above by our fraternity, to claim an additional benefits of 50,000.

Rs. 2.00 Lakhs with Section 80CCD(1) + Section 80CCD(1B)

You can now claim a deduction of Rs. 2.00 Lakhs, i.e. Rs. 1.50 Lakhs under Sec 80C and Rs. 50,000/- under Section 80CCD(1B).

It motivates employees to contribute more to NPS for future retirement benefits.

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