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Tax Deduction claim more than 2 lakhs under NPS, know How

Income tax return: Section 80CCD(2) is applicable to the amount given by the companies. Under this section, the contribution of the employer i.e. the company up to 10 percent of the salary (basic and DA) is considered eligible for tax deduction.



You must have heard a lot about tax saving scheme. But is there information about those sections of income tax through which you can claim tax and save your hard earned money. Now if these two are merged, that is, the tax saving scheme and tax saving sections are combined, then the taxpayer can get a lot of relief. Sections like 80C, 80D and 80TTA are very popular, with the help of which people save tax. In this, if you add the National Pension System (NPS), then you can claim tax of Rs 2 lakh.

It is well known that NPS allows investment of more than Rs 2 lakh in a financial year. On this basis you can reduce the tax liability. But apart from this, there are also rules, with the help of which you can save tax by investing more than 2 lakh in NPS. To save tax in NPS, there are three sections of income tax from which a person can claim tax deduction.

Tax exemption in these three sections

1- Section 80CCD (1) – This section comes under section 80C, in which there is a facility to invest a maximum of Rs 1.5 lakh in a year. You can invest 10 percent of the basic salary or up to Rs 1.5 lakh.

2-80CCD(B) – With the help of this section other than 80C, a person can save an additional Rs.50,000.

80CCD (2) – This section applies to the amount given by the companies. Under this section, the contribution of the employer i.e. the company up to 10 percent including salary (basic and DA) is considered eligible for tax deduction. This amount is more than Rs 1.5 available under section 80C. An employee can claim 10% deduction on the amount deposited by the company in the NPS account of the employee. In the case of central employees, this limit is up to 14 percent. In this way, NPS allows an employee to save tax up to Rs 2 lakh.

Tax saving fund

Contribution from companies is different from this. Companies also start NPS scheme for employees, on which tax can be easily saved. On this basis, we know how much tax a person working in the private sector can save through NPS. Suppose Vinod, who works in the private sector, has an annual basic salary of Rs 8 lakh. Vinod’s company deposits Rs 80,000 in his Tier-1 NPS account.

How to claim tax above 2 lakhs

On this basis, Vinod can claim 10 percent deduction of Rs 80,000 from his basic salary of Rs 8,00,000. 1.5 lakh under section 80CCD(1), additional Rs 50,000 under 80CCD(b) and 10 per cent of the basic salary on NPS contribution of the company under 80CCD(b) i.e. Rs 80, then it will be Rs 2,80,000 on which deduction can be claimed. The company’s NPS contribution gets a tax exemption of 10 percent, which is 10 percent of the basic salary and DA.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ praveshmaurya24@gmail.com
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