Old Useful G.Os



Monday 15 February 2016

CPS Clarification on 80CCD(1B)

Income Tax Department has been given clarification on PRTUTS representation on CPS deduction amounts will be covered under both sections it is U/s 80CCD(1) and 80CCD(1B). PRTUTS representation as follows.

                Sub : CPS (NPS) –  Clarification on 80CCD(1B) – requested – regarding.
                Ref: 1. G.O.Ms.No. 653 Finance (Pension-I) Dept. Dt. 22.09.2004
                        2. G.O.Ms.No. 654 Finance (Pension-I) Dept. Dt. 22.09.2004
                        3. G.O.Ms.No. 655 Finance (Pension-I) Dept. Dt. 22.09.2004
                        4. Government of India, Ministry of Finance Department of Revenue Central Board of    
                        Direct Taxes Circular Memo No. 20/2015 Dt. 02.12.2015

As per references 1st to 3rd cited above the Government of Andhra Pradesh adopted the Government of India’s a New Pension Scheme(NPS) based on Defined Contributions for the employees of the State, who are newly recruited on or after 1-9-2004. Under the new Contributory Pension Scheme (CPS), each employee has to contribute a certain amount and Government may contribute a certain amount i.e 10% of Salary (Basic Pay + DA).

The Ministry of Finance Department of Revenue Central Board of Direct Taxes has been issued instructions brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/ State Governments vide reference 4th cited above.

According to the reference 4th cited above, in that 5.5.3 paragraph 2 As per section 80CCD(1B), an assessee referred to in 80CCD(1) shall be allowed an deduction in computation of his income, of the whole of the amount paid or deposited in the previous year in his account under the pension scheme notified or as may be notified by the Central Government, which shall not exceed Rs. 50,000. The deduction of Rs. 50,000 shall be allowed whether or not any deduction is allowed under sub-section(1). However, the same amount cannot be claimed both under sub-section (1) and sub-section (1B) of section 80CCD.

Those who are appointed on or after 01.09.2004 there are two queries in regard to income tax 

1) If employees have savings 1,50,000/- under section 80C excluding CPS deduction, Can the incumbent avail Rs. 50,000/- under 80CCD(1B) the amount which was deducted towards to CPS (NPS)?. 2) If the employee have less than 1.5 lack savings in 80C and exceeds 50,000 towards CPS (NPS), Can he avail the exceeding amount in 80CCD(1) and 80CCD(1B)?.

Income tax department has given answer Yes to the both questions vide No. CCIT/Tech/67/2015-16 Dt. 12.02.2016.

Example :1

Example : 2

APGLI                      20000 APGLI                      30000
GIS                 720 GIS                 1440
LIC          35000 LIC          35000
Home loan Principle  90000 Home loan Principle  0
Children Tuition Fee  20000 Children Tuition Fee  40000
CPS Deduction    45000 CPS Deduction    75000





U/s 80c (APGLI+GIS+LIC+Home Loan Principle+Children Tuition Fee) 
U/s 80c (APGLI+GIS+LIC+Home Loan Principle+Children Tuition Fee+ CPS (25,000)) 
CPS U/c 80CCD(1B)                         :   
CPS U/c 80CCD(1B)                         :    

Total  Savings U/s 80C +80CCD(1B) :


Total  Savings U/s 80C +80CCD(1B) :


  • If employees having savings Rs. 1.50 lacks excluding CPS deduction, they can avail 50,000/- deducted towards CPS as additional savings towards NPS U/s 80CCD(1B) 
  • If the Employees less than 1.5 lacks savings U/s 80C and Rs. 50,000/- towards CPS(NPS), they can split the CPS amount in 80CCD(1) and in 80CCD(1B). 
So total CPS Employees can save upto Rs. 2 Lacks including 80C.

IT Department Clarification - Download

1 comment: