Should you Invest Rs 50,000 in NPS to Save Tax u/s 80CCD (1B)?

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• U/c 80ccd(ib) investment as eligible Over ad above Rs.150000 Savings 80C Salary employee

  • Yes so in total 80CCD(1B) and 80C can give you tax exemption up to Rs 2 lakhs

• You had mentioned that 'long term capital gain from investment in equity mutual funds is tax free'. Kindly inform what is the minimum time period required for getting tax free capital gain from investing in long term equity mutual funds?

  • For equity mutual funds - your holding time period should be more than 1 year to qualify for long term capital gains - which is tax free.

    • Sorry.. As per my knowledge, the minimum time period to avail the tax benefits from an equity mutual fund is minimum 3 years from the date of investment i.e ELSS funds. Please refer ELSS funds for more info. However it is not 1 year for sure.

      • @Amit Praveen is asking about tax on equity mutual fund and not about tax saving mutual fund. You are right the minimum holding period for ELSS is 3 years. But for other equity mutual funds the gains are tax free if held for more than 1 year.

• Very Good Evaluation Report, Sir. Now I understand that the better investment option is in Mutual Funds than in NPS. Thanks for your analysis report

  • Thanks for your appreciation :)

• Sir I wish to invest 50000 in NPS and wish to get benefit under sec 80 CCD(1b) kindly tell me the procedure Ajay Nag

  • I had written about How to Open NPS Account? The whole process takes around 6 weeks from the day you deposit your form, so hurry up if you want to take tax benefit this financial year.

• sir,
  I am in a govt.job, my employer deducts 62000 p.a total from salary as employee’s contribution (NPS) on which I get tax benefit under 80 ccd(1) and also deposits 62000 p.a. under NPS as employer’s contribution on which I get tax benefit under 80 ccd(2)

  I have deposited 1,40,000 under section 80 c

  now i want to ask u that may i use 10000 from 62000 in 80 c and 50000 in ccd1 b from rest ammount 52000.

  • You can use your contribution to NPS to claim tax benefit u/s 80CCD(1B) up to Rs 50,000 and the rest u/s 80CCD(1). 80CCD(1) along with 80C has maximum exemption limit of Rs 1.5 Lakhs.

• Mr. Amit please differentiate sec. 80CCD(1B) & sec. 80CCD(1) ...with an appropriate example.

  • Employee contribution to NPS up to 10% of basic salary and dearness allowance (DA) up to 1.5 lakh is eligible for tax deduction u/s 80CCD(1). The overall limit for tax exemption for 80CCD(1) and 80C combined is capped at Rs 1.5 lakh.

    Section 80CCD(1B) is the new section introduced in the last budget. In this case you can get tax deduction up to rs 50K by investing in NPS.

    Now in cases, where you have forced deduction directly from salary - you can take advantage of any of the above two sections for claiming tax benefit. The ideal way would be to first claim tax benefit u/s 80CCD(1B) and rest u/s 80CCD(1). For remaining part you can do your tax saving investment u/s 80C.

  • I m a central govt employee…..to calculate the total income. the contribution from employer will be added or not….if added then under which sec. this contributed amount will be eligible for deduction and what is ceiling amount.

    2. simultaneously the amount deducted from salary towards NPS tier – 1, i.e. employee contribution will be eligible for tax exemption or not?..if eligible then under which section and is there any ceiling.?

    i have already deposited 1.5 lakh in SBI PPF account.

    please tell me how much i can avail for tax exemption.

    • You can include employer contribution in NPS in your total income but it is anyway exempted from tax u/s 80CCD(2). This would be shown in the Form 16 issued by your employer.

      Employee contribution is eligible for tax deduction u/s 80CCD(1) and 80CCD(1B). You can choose which section to take benefit.

      For more details read my post on NPS Tax Benefits (scroll to the last paragraph of the post)

• Sir I am a government employees as appointed after 1.1.2004
  Q.1 I have not deposit in my nps account as per govt rules Rs 50000

  Q.2. Rs 50000 I have deposit any other tax saving scheme

  • I am sorry could not understand your question. Please rephrase!

• Sir,
  I am a central govt employee contributing Rs. 55,000/- in the NPS as mandatory employee contribution, Can I claim this amount u/s 80CCD 1B instead of 80CCD(1) and invest in other instruments for completing my limit of Rs. 1,50,000/- u/s 80C. Alternatively is 80CCD 1B valid for mandatory contribution as well?

  • Sir, I am a govt employee of haryana govt. and I have deposited rupees 119700 in PLI and 37706 in LIC after that I have deposited rupees 44142 in NPS.
    sir, tell me on how much rupees i get tax deduction(rebate) ?

    • All 3 investments - PLI (Postal Life Insurance), LIC and NPS qualify for tax deduction. You'll get Rs 44,142 tax exemption u/s 80CCD(1B) and Rs 1.5 lakh deduction for investment in PLI & LIC. So in total you would get Rs 1.94 lakh deduction.

  • yes you can show your compulsory investment in NPS u/s 80CCD(1B) and invest Rs 1.5 Lakh in 80C as per your choice.

• Dear sir
  My I am government employed and
  Investment amount is
  PPF 120000 LIC 25000 AND TIER-1 55000 CAN I benefit of section 80ccd(1b) of limit 50000

  • Yes you can take tax benefit of Rs 50,000 investment in NPS u/s 80CCD(1B)

• Sir,
  I am a State Government Employee of Andhra Pradesh. A deduction of 10% of Salary (Pay+DA) is being carried out under Contributory Pension Scheme. The total deduction towards CPS is 62,000/-.
  Earlier I used to show this deduction under 80CCD(1). Additionally, I have LIC premium of 1,50,000/-. My doubt is can i show 1,50,000/- under 80C and get claim tax benefit under CCD1(B) on the additional 50,000 towards Contributory Pension Scheme amount (of Rs. 62,000/- limited to Rs. 50,000/-)

  • YEs you can now show NPS up to 50K u/s 80CCD(1B) and rest u/s 80CCD(1)