All VOs recruited after 2004 can avail additional 50,000 deduction

[VOPunjab]

All VOs recruited after 2004 can avail additional 50,000 over the normal deduction of 1,50,000. This is to inform all in time as you all soon be filing your savings/tax statements soon.

This additional deduction of 50,000 comes under section 80CCD (1B)

 

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[drnaveengt]

Hi sir, am Dr Naveenkumar G T, a Veterinary officer from Karnataka. I want to clarify regarding NPS tax benefit post on psvoa forum.

 

In forum post, u mentioned govt share comes under 80ccd(1b) which is wrong. Nps employee contribution can be shown under 80ccd(1b) over n above 1.5 lakh upto 50k.

 

Govt share cannot be shown for tax benefits, read this it dept circular FY 15-16 http://www.circular.gconnect.in/download/income-tax/circular20_2015.pdf

 

Read defn of salary on page 15, pt iii, govt share is part of salary and has to be shown in gross and deducted in section 10 as follows

 

Exempt Incomes and Allowances▶

 

Information of Section 10 of I T Act relating to Individuals and HUFs.➡

 

Taxability of Retirement Benefits⬇

 

Payments from New Pension Scheme

 

Employer's contribution during the year to notified pension scheme is first included in the income of the assessee, and then such contribution, subject to maximum of 10% of salary, is deducted in the year in which contribution is made.

 

That nullifies govt share.

Finally, Govt share of nps has to be shown in gross and deducted in gross. So, govt share is nullified. In 80ccd2 , the option given for employer contribution is a waste for govt employees and confused many of us. But ur share u can show either in 80ccd1 or 80ccd1b. If ur 80cc savings like insurance, mutual fund, ppf etc come to 1.5 lakh , u can show ur nps contribution in 80ccd1b for addnl 50k benefit. We can split our share of nps contribution if under 80c it exceeds 1.5 K and rest amt can be shown under 80ccd(1b) for benefit.

 

Eg: if my 80c savings except my nps is 1.3 lakh and my NPS share is 50k, I can split my NPS share as 20k for 80c and 30k for 80ccd(1b) for addnl benefit.

 

Correct me if am wrong.