What is Section 80C?
Who is Eligible to claim Deduction under Section 80C?
What is the Amount of Deduction available u/s 80C?
What is the Deduction Limits for Sections 80C, 80CCC, 80CCD(1), 80CCE, and 80CCD(1B)?
What are the eligible investments for 80C?
What are the Tax Deductions available for Stamp Duty and Registration Fees Under Section 80C?
What is Section 80CCC?
Who is an Eligible Assessee u/s 80CCC?
What is the Amount of Deduction available u/s 80CCC?
What is Section 80CCE?
What is Section 80CCD, Contributions to Pension Schemes?
Who is eligible to claim Deduction on Contributions to Pension Schemes u/s 80CCD?
What is covered under 80CCD(1) & 80CCD(2) of income tax act?
What is Budget 2024 - Update related to 80CCD?
What is the eligibility for deductions on contributions to pension schemes under section 80CCD for the new tax regime?
What is Section 80CCD(1) related to contribution to NPS?
Is Section 80CCD(1) applicable to NRIs related to contribution to NPS?
What is the Deduction limit u/s 80CCD(1) related to contribution to NPS?
What is the additional limit under Section 80CCD(1B) related to contribution to NPS ?
What is Section 80CCD(2) related to employer's contribution to the NPS?
What is the applicability of Section 80CCD(2) employer's contribution to the NPS?
What is the Deduction limit under Section 80CCD(2) employer's contribution to the NPS?
What do you mean by the National Pension Scheme under 80CCD?
What are the Terms & Conditions to claim Deduction under Section 80CCD related to NPS?
How to calculate Deduction under Section 80CCD related to NPS contribution?

What is Section 80C?

Section 80C of the Income Tax Act allows individuals to claim deductions on specified investments and expenses, such as life insurance premiums, Employee Provident Fund (EPF), Public Provident Fund (PPF), and tax-saving fixed deposits. The maximum deduction limit under this section is Rs. 1.5 lakh per year.

Note: This Deduction can be claimed by the assessee only if he chooses to opt for the Old Tax Regime.

Who is Eligible to claim Deduction under Section 80C?

In order to claim a deduction under section 80C only Individuals and HUFs are eligible.

What is the Amount of Deduction available u/s 80C?

The Maximum amount of deduction available under section 80C is Rs. 1,50,000

An annual deduction of up to Rs. 150,000 can be claimed from the gross total income. However, this deduction is not available to companies, partnership firms, or LLPs.

What is the Deduction Limits for Sections 80C, 80CCC, 80CCD(1), 80CCE, and 80CCD(1B)?

Sections 80CCC and 80CCD offer deductions for investments made in pension schemes, either by you or through your employer's contribution.

The total maximum deduction under Sections 80C, 80CCC, and 80CCD(1) combined is Rs. 1.5 lakh. Additionally, you can claim an extra Rs. 50,000 under Section 80CCD(1B) for contributions to the National Pension Scheme (NPS).

Therefore, the overall deduction limit is Rs. 2 lakh under Sections 80C, 80CCC, 80CCD(1), and 80CCD(1B).

What are the eligible investments for 80C?

Following are the Eligiblity Investments under section 80C:

1. Life Insurance Premium (LIP)

a) For individual: Self, Spouse, Children
b) For HUF: Any member

2. Amount deposited in Public Provident Fund (PPF)

a) For Individual: Self, Spouse, Children
b) For HUF: Any Member

3. Employee's contribution to

a) Statutory provident fund
b). Recognised Provident fund, or
c). Approved Superannuation Fund

4. Amount invested in NSC as well as interest accrued on NSC.

5. Repayment of Loan taken from banks or financial institutions for purchase or construction of House.

6. Fixed Deposit in a scheduled Bank or Post office for 5 years or more.

7. Tuition fees paid for the education of children. [Max 2 children for full-time education in India].

8. Deposit in Notified bonds of NABARD

8. Deposit in Senior Citizen Saving Scheme.

9. Contribution towards Unit Linked Insurance Plan (ULIP).

10. Notified units of Mutual Funds or UTI.

11. Notified Pension scheme of UTI or MF.

12. Deposit in Sukanya Samridhi scheme A/c [For any girl child of an individual or girl child for whom such individual is a legal guardian].

13. Stamp duty, Registration fee for acquisition of house property.

14. By an employee of CG as a contribution to a specified account of the pension scheme referred to in Sec. 80CCD for a fix period of Three years or more (NPS Tier-II).

15. Contribution to National Housing Bank (Tax Saving) Term Deposit Scheme, 2008.

What are the Tax Deductions available for Stamp Duty and Registration Fees Under Section 80C?

Under Section 80C of the Income Tax Act, taxpayers can claim deductions for stamp duty and registration charges, provided they are included within the overall limit of Rs. 1.5 lakh. This deduction is available regardless of whether a home loan is taken. However, it can only be claimed in the year the expenses are incurred.

What is Section 80CCC?

Contribution to Pension Fund of LIC or other Insurance company

Who is an Eligible Assessee u/s 80CCC?

Any Individual is eligible for assessee under section 80CCC.

What is the Amount of Deduction available u/s 80CCC?

The amount of deduction available under section 80CCC is Maximum of Rs. 1,50,000

What is Section 80CCE?

80C + 80CCC + 80CCD(1) cannot exceed Rs. 1,50,000.

What is Section 80CCD, Contributions to Pension Schemes?

Section 80CCD provides tax deductions for individuals who contribute to the National Pension Scheme (NPS) or the Atal Pension Yojana (APY). This section also covers employer contributions made to the NPS.

Who is eligible to claim Deduction on Contributions to Pension Schemes u/s 80CCD?

Individuals are eligible to claim a deduction on contributions to pension schemes u/s 80CCD.

What is covered under 80CCD(1) & 80CCD(2) of income tax act?

Section 80CCD is further categorized into two subsections:
80CCD(1): This applies to contributions made by the individual (whether salaried or self-employed) to the National Pension Scheme (NPS).

80CCD(2): This applies to contributions made by the employer to the NPS.

What is Budget 2024 - Update related to 80CCD?

Rise in Deduction Limit for Employer Contributions to Pension Plans

Under the proposed amendments in the Finance Bill 2024, the deduction for employer contributions to the pension scheme (under section 80CCD(2)) has been raised from 10% to 14% of salary (including dearness allowance) for non-government employers. However, this change applies only to taxpayers opting for the new tax regime under Section 115 BAC.

What is the eligibility for deductions on contributions to pension schemes under section 80CCD for the new tax regime?

As per the new tax regime, only certain exemptions and deductions are allowed. The following is an analysis of the deductions available under 80CCD(1) and 80CCD(2). 80CCD (1): Taxpayer?s contribution to NPS

New Tax Regime: Not applicable
Old Tax Regime: Applicable
80CCD(2): Employer's contribution to NPS
New Tax Regime: Available
Old Tax Regime: Available

What is Section 80CCD(1) related to contribution to NPS?

This subsection outlines the rules for the income tax deduction available to taxpayers for their contributions to the NPS. It applies regardless of whether the contributor is a government employee, a private employee, or a self-employed individual. The provisions of this section are applicable to all Indian citizens aged between 18 and 70 years who contribute to the NPS.

Is Section 80CCD(1) applicable to NRIs related to contribution to NPS?

Yes, NRIs contributing to NPS can claim deduction under this Section.

What is the Deduction limit u/s 80CCD(1) related to contribution to NPS?

Following is the Deduction Limits u/s 80CCD(1) related to contribution to NPS:
1. Employees: The maximum deduction allowed for employees is 10% of their salary (basic + DA) from the previous year.

2. Self-Employed: For self-employed individuals, the maximum deduction is 20% of their gross total income from the previous year.

Note: The overall deduction limit under 80CCD(1) is capped at Rs. 1.5 lakhs for a financial year.

What is the additional limit under Section 80CCD(1B) related to contribution to NPS ?

Section 80CCD(1B) offers an additional deduction of up to Rs. 50,000 for contributions to the NPS, over and above the deductions available under Section 80CCD(1), for individuals who choose the old tax regime.

The combined limit under Section 80CCE, which includes the deductions under Sections 80C, 80CCC, and 80CCD(1), is capped at Rs. 1.5 lakh. The Rs. 50,000 deduction under Section 80CCD(1B) is in addition to this Rs. 1.5 lakh limit.

Therefore, the maximum deduction available under Section 80CCD can be up to Rs. 2 lakh (Rs. 1.5 lakh + Rs. 50,000).

What is Section 80CCD(2) related to employer's contribution to the NPS?

Under Section 80CCD(2), a deduction is available for the employer's contribution to the NPS.

An employer can contribute to the NPS in addition to contributions made towards PPF and EPF. The employer's contribution can be equal to or greater than the employee's contribution.

What is the applicability of Section 80CCD(2) employer's contribution to the NPS?

Section 80CCD(2) is applicable only to salaried individuals and not to self-employed individuals. The deductions under this section can be claimed in addition to those available under Section 80CCD(1).

What is the Deduction limit under Section 80CCD(2) employer's contribution to the NPS?

Section 80CCD(2) allows a salaried individual to claim the following deductions:

1. Central Government or State Government Employer: Up to 14% of their salary (basic + DA).

2. Any other employer:

Under the old tax regime: A maximum deduction of 10% of salary (basic + DA).

Under the new tax regime: A maximum deduction of 14% of salary (basic + DA)

(This 14% rate has been increased from 10% effective from FY 2024-25).

What do you mean by the National Pension Scheme under 80CCD?

Here are some key highlights of the NPS:

1. Contributions to the NPS must be made until the age of 70. While it is mandatory for Central Government employees, it is voluntary for other individuals.

2. To qualify for income tax deductions under the NPS Tier 1 account, a minimum annual contribution of Rs. 6,000 or Rs. 500 per month is required.

3. To qualify for income tax deductions under the NPS Tier 2 account, a minimum annual contribution of Rs. 3,000 or Rs. 250 per month is required.

4. Various investment options are available, including equity funds, government bonds, and government securities.

5. Partial withdrawals of up to 25% of the individual's contribution are allowed, subject to certain conditions.

6. Individuals can withdraw up to 60% of the corpus as a lump sum and must invest the remaining 40% in an annuity plan.

It is considered one of the most affordable equity-linked investment options available in the market.

What are the Terms & Conditions to claim Deduction under Section 80CCD related to NPS?

The following are the terms and conditions governing the deductions under Section 80CCD:

Deductions under Section 80CCD are available to both salaried and self-employed individuals. While it is mandatory for government employees, it remains voluntary for others.

The maximum deduction limit under Section 80CCD is Rs. 2 lakhs, which includes the additional Rs. 50,000 deduction available under Section 80CCD(1B).

Tax benefits under Section 80CCD cannot be claimed again under Section 80C. Therefore, the combined deduction under Sections 80C and 80CCD cannot exceed Rs. 2 lakhs.

Any income received from the NPS, such as monthly payments or amounts from surrendered accounts, will be subject to taxation according to applicable provisions.

Amounts reinvested in an annuity plan from the NPS are fully exempt from taxation.

The deductions available under Section 80CCD can be claimed when filing your income tax returns at the end of the financial year, provided proof of payment is submitted.

How to calculate Deduction under Section 80CCD related to NPS contribution?

Let's consider an example where an individual is contributing to the NPS. Assumptions:

Employee's Salary (Basic + DA): Rs. 8,00,000

Employee's Contribution to NPS (Section 80CCD(1)): Rs. 40,000

Employer's Contribution to NPS (Section 80CCD(2)): Rs. 50,000

Additional Contribution under Section 80CCD(1B): Rs. 50,000

Total Deduction Calculation Employee's Contribution (80CCD(1)): Rs. 40,000

Employer's Contribution (80CCD(2)): Rs. 50,000

Additional Contribution (80CCD(1B)): Rs. 50,000

Total Deduction (80CCD) = Rs. 1,40,000

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