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Articles 1943 views September 23, 2020
It is the duty of every earning citizen of India to pay taxes on their annual income. But on the other hand, the Income Tax Act 1961 also provides some relief on taxation. It gives deductions on your taxable income. So, if you have made an investment then you can claim it for deductions as per the tax rules. Section 80CCD of the Income Tax Act 1961 allows deductions against the investments you have made in National Pension Scheme and Atal Pension Yojana. So, you must explore the terms and conditions of the deduction and see how it helps you to save some extra taxes.
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Section 80CCD helps you to enjoy deductions against the investment made in the National Pension Scheme and Atal Pension Yojana. As per the Central Government, you are allowed to take deductions with the help of this section, and all the contributions made by you in these pension plans are also covered in this section.
There are two subsections of Section 80CCD and you can explore all the details of them below:-
In the union budget of 2015, a new sub-section was introduced known as Section 80CCD (1B) in which you can claim an additional deduction of INR 50000. This deduction is allowed to both salaried and self-employed individuals. Therefore the maximum deduction capped in Section 80CCD of the Income Tax Act 1961 is Rs. 200000.
This section applies only to the salaried individuals in which the employer has to make a contribution to the NPS. It allows the salaried individuals to enjoy deductions of 10% of their salary and the salary will be basic pay + dearness allowance or is equal to the contribution made by the employer in NPS.
You can claim the deductions under Section 80CCD at the time of filing your income tax returns when the financial year ends. You will have to show all the supporting documents to claim the deductions. The supporting documents will the investment receipts or proofs that you are contributing to the National Pension Scheme.
This plan was introduced by the government so that an individual can accumulate funds for his future. It can be taken by any citizen of India whether he is working in a private sector or public sector. Even self-employed individuals can take this pension plan. The basic purpose of this plan is to help individuals to live a happy life even after their retirement. You must explore the various details of the National Pension Scheme:-