Section 80CCD

 Section 80CCD of the Income Tax Act, 1961, provides provisions for deductions available on contributions made to the National Pension System (NPS) or Atal Pension Yojana (APY). Here's an overview of deductions available under Section 80CCD(1) and Section 80CCD(1B):

Section 80CCD(1):

Under Section 80CCD(1), contributions made by an individual taxpayer to their NPS account are eligible for deduction from their total income. This deduction is available to both employees and self-employed individuals.

For employees, the maximum deduction allowed is 10% of their salary (Basic Salary + Dearness Allowance), subject to a maximum of 20% of their gross total income.

For self-employed individuals, the maximum deduction allowed is 10% of their gross total income, subject to an overall limit of ₹1.5 lakh under Section 80CCE (which includes deductions under Section 80C, 80CCC, and 80CCD).

Additionally, contributions made by the employer to the employee's NPS account are eligible for deduction under Section 80CCD(2), which is over and above the limit mentioned above.

Section 80CCD(1B):

Section 80CCD(1B) provides an additional deduction of up to ₹50,000 per financial year for contributions made by an individual taxpayer to their NPS Tier-I account.

This deduction is available over and above the deduction available under Section 80CCD(1), thereby providing an opportunity for taxpayers to save additional taxes by investing in NPS.

The deduction under Section 80CCD(1B) is available to both employees and self-employed individuals and is part of the overall limit of ₹1.5 lakh under Section 80CCE.

Both deductions under Section 80CCD(1) and Section 80CCD(1B) are subject to the conditions and provisions specified under the Income Tax Act and the rules and regulations governing the National Pension System. Taxpayers should ensure compliance with these provisions and maintain proper documentation of contributions made to their NPS accounts to claim deductions during tax filing.