Additional deduction of 80CCD
for Contribution in NPS plus 80CCC Limit Increased...
Under the existing provisions contained in sub-section (1) of section 80CCD of the Indina Income-tax Act, 1961 if an individual, employed by the Central Government on or after 1st January, 2004, or / being an individual employed by any other employer, or / any other assessee being an individual has paid or / deposited any amount in a previous year in his/her account under a notified pension scheme, a deduction of such amount not exceeding 10% of his/her salary in the case of an employee and 10% of the gross total income in case of any other individual is allowed.
Similarly, the contribution made by the Central Government or / any other employer to the said account of the individual under the pension scheme is also allowed as deduction under sub-section (2) of section 80CCD, to the extent it does not exceed 10%. of the salary of the individual in the previous year.
Sub-section (1A) of section 80CCD provides that the amount of deduction under sub-section (1) shall not exceed Rs. 1 lakh. Till date, under section 80CCD, only the National Pension System (NPS) has been notified by the Ministry of Finance.
With a view to encourage people to contribute towards NPS, it is proposed to omit sub-section (1A). In addition to the enhancement of the limit under section 80CCD(1), it is further proposed to insert a new sub-section (1B) so as to provide for an additional deduction in respect of any amount paid, of upto fifty thousand rupees for contributions made by any individual assessees under the NPS.
Consequential amendments are also proposed in sub-section (3) and sub-section (4) of section 80CCD.
These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.
Please Note that this is additional deduction of Rs. 50,000 to Individual in addition to Rs. 1.5 lakh Limit allowed in 80CCE popularly known as 80C Limit.
Raising the limit of deduction under 80CCC..
Under the existing provisions contained in sub-section (1) of the section 80CCC, an assessee, being an individual is allowed a deduction upto Rs. 1 lakh in the computation of his/her total income, of an amount paid or / deposited by him/her to effect or/ keep in force a contract for any annuity plan of Life Insurance Corporation of India or / any other insurer for receiving pension from a fund set up under a pension scheme.
In order to promote social security, it is proposed to amend sub-section (1) of the said section so as to raise the limit of deduction under section 80CCC from Rs. 1 lakh to Rs. 1.5 lakh, within the overall limit provided in section 80CCE.
This amendment will take effect from April, 1- 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.
Summary of 80CCD and 80CCC sections after amendment is given as under
Income Tax Section
|
Details
|
Old Limit Rs.
|
New Limit Rs.
|
Covered in 80CCE overall Limit of Rs. 1.5 Lakh
|
80CCC
|
Contribution to Pension policy
|
1 lakh
|
1.5
|
Yes
|
80CCD(1)
|
Self Investment in Pension scheme
|
1
|
1.5
|
Yes
|
80CCD(IB)
|
Self Investment in Pension scheme
|
0
|
50,000
|
No (additional Limit)
|
80CCD(2)
|
Employer Contribution in NPS
|
Without any monetary limit
|
No (additional Limit)
| |
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