2168787 - Additional Deduction Under Section 80CCD(1B)
Symptom
As per Union Finance Bill 2015 there has been an amendment to Section 80CCD. The amendment says that Sub-section(1A) has been omitted and a new sub-section (1B) has been introduced.
The Sub-section (1B) is in addition to the deduction allowed under Sub-section(1), under a pension scheme notified or as may be notified by the Central Government and shall not exceed fifty thousand rupees.
Example:
CASE 1:
If an Employee 'X' has monthly salary of 1 Lakhs and he contributes 2 Lakhs towards NPS in a Financial Year and he has no other investments. He shall be able to claim total deduction as per calculation shown below:
(a) 10% of Annual NPS basis = 10% * 1200000 = 120000 INR
(b) Total NPS contribution = 200000 INR
Deduction u/s 80CCD(1) = 1.2 Lakhs [ Minimum of (a) , (b)]
Deduction u/s 80CCD(1B) = 50,000 INR
Total Deduction for = 1.2 Lakhs [80CCD(1) + 50,000 [80CCD(1B)] = 1.7 Lakhs
CASE 2:
If an Employee 'X' has monthly salary of 1 Lakh having contribution towards LIC as 1.2 Lakhs. He invests another 50,000 in NPS in the same Financial Year. He shall be able to claim total deduction as per calculation shown below:
(a) 10% of Annual NPS basis = 10% * 1200000 = 120000 INR
(b) Total NPS contribution = 50,000 INR
(c) Contribution towards LIC = 1.2 Lakhs
(d) Remaining deduction allowed under 80CCE = 30,000 INR
Deduction u/s 80CCD(1) = 30,000 INR [ Minimum of (a) , (b) , (d) ]
Deduction u/s 80CCD(1B) = 20,000 INR
Total Deduction = 1.2 Lakhs [80C] + 30,000 [80CCD(1)] + 20,000 [80CCD(1B) = 1.7 Lakhs
Other Terms
Additional Deduction Under Section 80CCD(1B), NPS, Section 80CCD, 80CCD, 80CCD(1B), INS80, INS88, /432, /3I1, /3I7, /3I9, National Pension System, Finance Bill
Reason and Prerequisites
Legal Change
Pre-Requisite Support Pack Level
Release Level | Pre-requisite Support Pack Level |
604 | SAPK-60477INSAPHRCIN |
600 | SAPK-600B1INSAPHRCIN |
Solution
The inconsistency described under Symptom is resolved.
To get the changes,apply the HR Support Package(s) indicated for your release in the 'Reference to Support Packages' section of this note.
Alternatively, Perform the below steps in the same sequence:
Note:
“ No deduction under (1B) shall be allowed in respect of the amount on which a deduction has been claimed and allowed under sub- section (1). “
which implies that the deduction under 80CCD(1) will be considered first and will be part of 80CCE
/3I7 : 80CCD(1)
/3I9 : 80CCD(1B)
/3I5 : Combined Employee 80CCD Exemption ( /3I7 + /3I9 )
Header Data
Released On | 15.06.2015 12:44:01 |
Release Status | Released for Customer |
Component | PY-IN India |
Priority | Correction with high priority |
Category | Legal change |
Validity
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Correction Instructions
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Support Packages & Patches
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Attachments
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Note No | Version | Note Description | Priority | Support Package |
---|---|---|---|---|
2235173 | 2 | Sec 80DDB: Medical Treatment Exemption being Calcuated Incorrectly | High priority | SAPK-60498 |
2243302 | 3 | S80D: Incorrect Calculation of Preventive Health Check Up | High Priority | SAPK-60498 |
2261915 | 2 | Incorrect Calculation of Conveyance Exemption for Challenged Employees | Medium Priority | SAPK-60498 |
2263249 | 1 | Gratuity: GRYCO Constant not Considered Upto 5 Decimal Places for Exemption Computation | Medium Priority | SAPK-60498 |
2266067 | 2 | /4MI not Recomputed When Multiple Form 16 is Inactive | Medium Priority | SAPK-60498 |
2267268 | 8 | Income Tax rounding - New value for TAXRO | High priority | SAPK-60498 |
Cheers
Ratan
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