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I have doubt with 80ccd(2) of income tax act,

23 February 2021

Hi Everyone,

Is it applicable for state /central government employee where 10% is basic+DA invested in NPS and govt/employer contributes 14% of it but while calculating Income tax return ,employer/govt contribution not included in gross salary of employee , can we claim 80ccd(2) of income tax benifit here or not please clarify

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2 Replies

Fatema S. Mansawala (Chartered Accountant) (30 Points)
Replied 23 February 2021

- 80CCD(2) is applicable to government employee.(Both Central and state government)

- It can be considered while filing the income tax return, if not considered by employer in form 16.

- The contribution should be 10% of basic pay plus dearness allowance or equal to employers contribution but not more.

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Josh (Manager) (124 Points)
Replied 07 March 2021

Section 80CCD (2) pertains to contribution made by employer (Central Government or any other employer) in notified pension scheme. Deduction allowed under this section is restricted to maximum.

a. 14%, of salary (Basic +DA) where such contribution is made by the Central Government;

b. 10% of salary (Basic +DA) where such contribution is made by any other employer,

So the deduction of 14% is applicable only to Central Government employees currently. Pls. check with concerned department why the contribution by employer is not reflected in gross salary. Generally, this should be reflected as a part of gross salary. However you can claim 80CCD(2) deduction up to the limits mentioned above in returns.