Is NRI eligible for deduction U/s 80C, if he invest in, 1. recognized Provident Fund 2. Statuary Provident Fund 3. Public Provident Fund 4. Any pension fund set up by Mutual Fund (As referred U/s 10(23D)) or UTI,
and U/s 80CCD, if he invest in National Pension Scheme. ????
07 December 2015
Deductions not allowed to NRIs (u/s 80C)
Investment in PPF are not allowed. (NRIs are not allowed to open new PPF accounts, however PPF accounts which are opened while they are a Resident are allowed to be maintained.)
20 July 2024
Deductions under Section 80CCD of the Income Tax Act, 1961 are primarily related to contributions made towards the National Pension System (NPS). Here's how the provisions of Section 80CCD apply to Non-Resident Indians (NRIs):
1. **Deduction for Employee Contribution to NPS (Section 80CCD(1)):** - **For Residents:** Any individual who is a resident of India can claim a deduction under Section 80CCD(1) for contributions made towards their NPS account. - **For NRIs:** NRIs are also eligible to claim deduction under Section 80CCD(1) for contributions made towards their NPS account, subject to certain conditions. - **Conditions for NRIs:** The deduction under Section 80CCD(1) for NRIs is available only for contributions made to the NPS Tier-I account. The maximum deduction allowed is 10% of the salary (for employees) or gross total income (for self-employed) or Rs. 1.5 lakh (whichever is lower).
2. **Additional Deduction for Employer Contribution to NPS (Section 80CCD(2)):** - **For Residents:** Employees can claim an additional deduction under Section 80CCD(2) for contributions made by their employer to their NPS account, up to 10% of their salary. - **For NRIs:** NRIs employed in India and contributing to NPS can also claim the deduction under Section 80CCD(2) for employer contributions. This deduction is not restricted based on the residential status but is linked to the employment in India.
3. **Total Deduction Limitation (Section 80CCD(1B)):** - **For Residents:** An additional deduction of up to Rs. 50,000 is available under Section 80CCD(1B) over and above the limit of Rs. 1.5 lakh under Section 80CCD(1). - **For NRIs:** NRIs can also claim the additional deduction of Rs. 50,000 under Section 80CCD(1B) if they contribute to their NPS account.
### Key Points to Note: - **Residential Status:** NRIs are eligible for deductions under Section 80CCD(1) and 80CCD(2) as long as they contribute to their NPS Tier-I account. Contributions to NPS Tier-II accounts do not qualify for these deductions.
- **Employer Contributions:** The deduction under Section 80CCD(2) for employer contributions is applicable for NRIs employed in India, regardless of their residential status.
- **Claiming Deductions:** To claim deductions under Section 80CCD, NRIs need to ensure compliance with the provisions of the Income Tax Act and submit appropriate proof of contributions and employment status in India, where applicable.
- **Taxation of Withdrawals:** Any withdrawals from the NPS account by NRIs are subject to taxation based on the residential status at the time of withdrawal and applicable tax treaties between India and the country of residence.
In conclusion, NRIs can avail deductions under Section 80CCD for contributions to NPS Tier-I accounts, subject to specific conditions and limits prescribed under the Income Tax Act. It's advisable for NRIs to consult with a tax advisor or financial consultant to optimize their tax planning and ensure compliance with tax laws.
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