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Conditions:
NPS Tier-1 contribution from salary per year > 60000
NPS Tier-1 contribution from company per year > 60000

Question 1:

How much amount is counted for 80CCD? Is it just salary or also the government contribution?

Question 2:

Consider the following scenarios - Fixed amount is amount of NPS contribution.

Scene 1:
Invest in NPS for > Rs.60K. Invest in PPF/ELSS/Insurance for Rs. 1.5 Lakhs You get Rs.2 Lakh tax benefit, rest 10K investment doesn't get any rebate.

Scene 2: Invest in NPS for > Rs.60K. Invest in PPF/ELSS/Insurance for Rs. 1.4 Lakhs You get Rs.2 Lakh tax benefit. Total NPS is utilised.

My question is whether scene 2 is possible or not? Do I have to invest in PPF/ELSS/Insurance or whatever 80C permits for full Rs. 1.5 Lakhs and only then I'd get to use extra tax benefit of Rs. 50K or can I reduce my PPF/ELSS/Insurance to fit in NPS contributions?

3 Answers 3

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Only your contribution is counted towards 80CCD.

Both scene 1 and 2 are possible. You can choose based on convenience

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80CCD is just for NPS & its not mandatory to have utilized the 1.5 lakh limit you can still claim 80CCD.

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Question 1:

How much amount is counted for 80CCD? Is it just salary or also the government contribution?

  • For non-govt. employee, there is no contribution by the government.
  • The amount limits are: Self-contribution - 10% of salary [80CCD(1)] + Rs. 50,000 [80CCD(1B)]. Employer contribution: 10% of salary [80CCD(2)].

And total deduction limit of 1.5 lakh under section 80C, 80CCC, 80CCD(1) combined, and 50k under section 80CCD(1B).

Question 2:

Scenario 2 is possible. Rs. 1.5 lakh limit is for all deductions under section 80C, 80CCC & 80CCD(1). Here, 1.4 lakh is available u/s 80C, 10k in 80CCD(1) = 1.5 lakh & 50k in 80CCD(1B).

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