होम  »  Income Tax  »  Section 80CCD(1)

Section 80CCD(1) of Income Tax Act

Employee’s Contribution To Pension Scheme

If an individual makes deposit to his/her pension scheme then they can avail deduction for the same under Section 80CCD. The maximum amount of deduction allowed stands at 10% of salary (for individual employees who pay income tax) or 20% of gross total income (for tax payers who are self-employed) or Rs 1,50,000, whichever is less.

Deduction for Self – Contribution to NPS under Section 80CCD(1B)

Individuals who deposit money towards National Pension Scheme (NPS) can avail for tax rebate under Section 80CCD up to Rs 50,000 per annum. Deposits made towards Atal Pension Yojana are also eligible to get deduction under this scheme.

All About National Pension Scheme

The National Pension Scheme is a Central Government backed scheme aimed at savings which aims to build a corpus amount which can be used post-retirement. It is meant solely for the citizens of India.

The following are the provisions of NPS

  • All the Central Government employees have to subscribe to the NPS
  • One can make contributions to this scheme until they attain the age of 60 years
  • Apart from Central government employees, others can also voluntarily contribute towards the scheme
  • Minimum monthly contribution towards the scheme is Rs 500 and a minimum annual contribution of Rs 6000 is necessary to be eligible for tax deductions under Tier 1 of the NPS
  • The minimum monthly contribution of Rs 250 and a minimum annual contribution for the scheme is Rs 2000 is necessary for claiming rebate under Tier 2 of the NPS
  • It is a cost-effective market linked investment scheme
  • It offers a wide range of investment instruments to select for ranging from fixed income bearing instruments, government securities, equity funds.
  • Investors can avail for withdrawal of up to 25% on specific situations based on the reason behind the withdrawal
  • In case of a deferred exit, 80% of the withdrawal proceeds have to be reinvested in an annuity.
  • Investors can withdraw up to 60% of the proceeds in a lump sum and the remaining 40% has to be reinvested back into an annuity plan.
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