To help people get the most out of their filing, the government offers a variety of deductions that work wonderfully and keep the citizens as well as NRIs on their toes by the end of every financial year.
Amidst a variety of other deductions, Section 80CCD of the income tax Department is specifically meant for those who are contributing to a National Pension Scheme. Seems interesting? Read on to know more.
The section 80CCD Deduction is for individuals who made contributions to the Atal Pension Yojana (APY) or the National Pension Scheme (NPS). Contributions by employers to the NPS are also counted under this section.
Introduced by the Central Government, NPS is a scheme for the Indian citizens. Earlier, it was only for government employees. However, later, its benefits were opened for self-employed as well as private-sector employees as well.
The primary intention behind this scheme is to help people come up with a retirement corpus and get a monthly fixed payout to lead a comfortable post-retirement life. Some of the major factors of this scheme are:
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Section 80CCD of the Income tax act has been divided into two different subsections so as to keep the clarity intact for deductions available for income tax assesses.
80CCD (1) is a subsection is meant to define the terms and rules related to deductions available for individuals in regards to their contributions towards NPS. It is irrespective of the profession of the contributor, meaning you could be self-employed, privately employed or even a government employee.
This section’s provisions are for every citizen and NRI contributes to NPS and is between 18 to 60 years of age. Some of the essential points are:
The provisions under this subsection are applied if an employer is contributing to NPS on behalf of an employee. This contribution can be made in addition to EPF and PPF. Also, the amount of contribution could be equal to or higher than the amount of contribution made by the employee. Under this section, salaried individuals can claim a deduction of up to 10% of the total salary, including the dearness allowance and the basic pay.
To avail deductions under section 80CCD, the following terms and conditions should be kept in mind:
Investing for a convenient, comfortable post-retirement life is a decision that can never go wrong. So, if you have not yet, consider investing in this scheme. On top of that, the deductions that you can avail should be a significant reason to invest. Take a step towards happy old-life today!
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