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Deduction under Sec 80CCD increased to 14% for state govt. employees



Incentives to National Pension System (NPS) subscribers for state government employees

1. Under the existing provisions of the Act, any contribution by the Central Government or any other employer to the account referred to in section 80CCD of the Act (NPS account), shall be allowed as a deduction to the assesses in the computation of his total income, if it does not exceed 14% of his salary where such contribution is made by the Central Government. This limit is presently 10% of his salary where such contribution is made by any other employer. The State Governments were given an option to raise the contribution to 14% w.e.f 01.04.2019 on their own volition, based on their own internal approvals and notifications, without seeking the approval of the Pension Fund Regulatory and Development Authority

Deduction under Sec 80CCD increased to 14  for state govt. employees

2. In order to ensure that the State Government employees also get full deduction of the enhanced contribution by the State Government, it is proposed to increase the limit of deduction under section 80CCD of the Act from the existing ten percent to fourteen percent in respect of contribution made by the State Government to the account of its employee.

3. This amendment will take effect retrospectively from 1st April, 2020 and will accordingly apply in relation to the assessment year 2020-21 and subsequent assessment years; so as to ensure no additional tax liability arises on any contribution made in excess of 10% during such time.

 

[Clause 20]

 



About the Author

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I write informative articles on taxation, GST, TDS/TCS compliance, corporate laws, EPF, government schemes, and finance-related topics. My focus is on simplifying complex legal, tax, and compliance matters into practical and easy-to-understand guides for professionals, businesses, and general readers.


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