25 May 2016
i am an government employee. An amount of NPS/DCPS is deducted from my salary as my contribution to this scheme can I claim this amount under sec 80ccd (1B) which is out of bracket of 150000 deduction (of 80c) instead of claiming it u/s 80c
20 July 2024
Section 80CCD(1B) of the Income Tax Act allows for an additional deduction of up to Rs. 50,000 for contributions made towards the National Pension Scheme (NPS). Here’s how it applies:
### Deduction under Section 80CCD(1B)
1. **Applicability:** Section 80CCD(1B) is specifically meant for contributions made to the National Pension Scheme (NPS). It allows an additional deduction over and above the deduction available under Section 80C (which covers various investments like LIC premium, PPF, EPF, etc.).
2. **Eligibility Criteria:** - **Resident Individual:** The deduction under Section 80CCD(1B) is available to a resident individual only. - **Contributions to NPS:** To claim the deduction, the taxpayer must contribute to the NPS. This contribution can be made voluntarily, in addition to the mandatory contribution made by employees under Section 80CCD(1). - **Maximum Deduction:** The maximum deduction allowed under Section 80CCD(1B) is Rs. 50,000 per financial year. This deduction is over and above the limit of Rs. 1.5 lakh available under Section 80C.
3. **Claiming the Deduction:** - To claim the deduction under Section 80CCD(1B), the taxpayer needs to make contributions to the NPS and obtain a contribution statement from the NPS Trust or Pension Fund Regulatory and Development Authority (PFRDA). - The deduction can be claimed while filing the Income Tax Return (ITR). The taxpayer needs to fill in the details of NPS contributions under the relevant section of the ITR form.
### Your Situation
- If your query pertains to claiming a deduction for contributions made towards NPS while you were a resident in India and paid premiums to a Nepali insurance company, here’s the clarification:
- **NPS Contribution:** Contributions made towards NPS are eligible for deduction under Section 80CCD(1B), subject to the maximum limit of Rs. 50,000. - **Insurance Premium to Nepali Company:** Payments made to a foreign insurance company generally do not qualify for deduction under Section 80C unless specifically notified by the Central Government. Section 80C focuses on investments and expenses within India's regulatory framework.
### Conclusion
- **Section 80CCD(1B) Deduction:** You can claim deduction under Section 80CCD(1B) for contributions made towards NPS, subject to the maximum limit of Rs. 50,000 per financial year, provided you have made such contributions during the relevant financial year. - **Foreign Insurance Premiums:** Payments made to a foreign insurer like the Nepali insurance company do not qualify for deduction under Section 80C or Section 80CCD(1B) unless specifically allowed under the Income Tax Act.
For accurate advice suited to your specific situation, considering all details and recent amendments in tax laws, it’s advisable to consult with a qualified tax professional or chartered accountant. They can provide personalized guidance based on the latest provisions of the Income Tax Act applicable to NRIs and residents in India.
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