This is a good news for everyone , specially salary class and common taxpayers who were till now had the facility of tax deduction savings u/s 80C up to Rs 1,50,000. So, even even if you wish to save more, the tax benefits u/s 80C is over . However , starting Financial Year 2015-16, the tax payers have an option to save over and above Rs 150000 and claim tax deduction on that amount also.
Tax Deduction Savings : Rs 50000 More !
Everyone must be knowing that a person or employee who subscribe to notified pension plan or scheme can claim deduction for contribution upto Rs 1,5,000 under the provision u/s 80CCD. But the provision u/s 80CCE limits the combined savings for tax deduction u/s 80C, 80CCA and 80CCD to Rs 1,50,000.
Read the provision u/s 80CCE
Limit on deductions under sections 80C, 80CCC and 80CCD.
80CCE. The aggregate amount of deductions under section 80C, section 80CCC and sub-section (1) of section 80CCD shall not, in any case, exceed one hundred and fifty thousand rupees
Important thing to mark is that amount ins section 80CCD(1B) is included not section 80CCD(1B) which became effective from FY 2015-16 ( assessment year 2016-17) . Under the said subsection , Rs 50,000 of saving under notified pension scheme is given deduction . Read the provision u/s 80CCD(1B)
Following sub-section (1B) shall be inserted after sub-section (1A) [as so omitted w.e.f. 1-4-2016] of section 80CCD by the Finance Act, 2015, w.e.f. 1-4-2016 :
(1B) An assessee referred to in sub-section (1), shall be allowed a deduction in computation of his total income, whether or not any deduction is allowed under sub-section (1), of the whole of the amount paid or deposited in the previous year in his account under a pension scheme notified or as may be notified by the Central Government, which shall not exceed fifty thousand rupees:
What does it mean is that if you have exhausted the Rs 1,50,000 in various investments u/s 80C of the Income Tax Act, go an open an account under National Pension Scheme and save upto Rs 50,000 . In fact , you can open pension scheme online also .Thus , you will add to your retirement kitty , same way you save in a PF or other Pension Scheme .
Conclusion on Tax Deduction Savings Upto Rs 2 Lakh
From FY 2015-16, a person has the facility to save on long term upto Rs 2,00,000 and get tax deduction for such savings. First exhaust savings in instrupensts like PF, LIC or PPF etc upto Rs 1.5 Lakhs and the upt Rs 50,000 in pension plan u/s 80CCD(1B) of the Income Tax Act.