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Tax Confusing with 80ccd(1) amount adjust/split with 80ccd(1b)

26 August 2021

Sir/madam,

Can we spilt NPS employer-end contribution section 80ccd(1) amount in two parts as one for section 80c and second for section 80ccd(1b) ?

I am state government employee and having PPF saving of 1,30,000 under section 80C and my employee-end NPS contribution(80ccd(1)) is 70,000. Can i split/adjust 80ccd(1) amount into two parts as given below scenerio:

1. 80CCE = PPF (Rs 1,30,000) + 80ccd(1)(Rs 20,000) = 1,50,000

2. 80ccd(1b) = Rs 50,000 (remaining amount of 80ccd(1)).

Note:
As per Section 80CCE, the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) cannot exceed Rs.1. 5 lakh.

Our state government not accepting this scenario and saying that you can not split/adjust section 80ccd(1) amount with section 80ccd(1b) amount. If anybody knows exact rule plz share authentic proof.

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2 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 26 August 2021

1) EMPLOYER'S contribution up to 10% of salary is eligible for deduction u/s 80CCD(2). Here the contribution from the employer is added as income and deducted u/s 80CCD(2). If the contribution from the employer is up to 10% of salary, then no tax is payable on the same. That is net effect is zero because income is added and reduced.

2) EMPLOYEE'S contribution can be split into 2 components: deduction of 10% of salary up to a max of Rs.1.5 lacs (within the overall limit of 80C) u/s 80CCD(1) and deduction up to Rs.50k u/s 80CCD(1B).

In your case:

1) PPF Rs.1.3 lacs is eligible for deduction u/s 80C

2) Employer's contribution (assuming to be 10% of salary) u/s 80CCD(2)

3) Employee's contribution as applicable.

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Bhavik Prajapati (Proprietor) (22 Points)
Replied 31 January 2023

Still Query is not resolved as per my opinion, as Here Question is Mainly for Employee Contribution which is deducted from Salary of Employee by Government Department.

For Example: Person has Deduction of Rs. 130000 under Section 80C

and Compulsory Contribution under Section 80 CCD (1) ( 10% Basic + DA) deducted From Salary is Rs. 70000

then can we claim Rs. 20000 under Section 80 CCD(1), and rest in Section 80CCD(1B)?