Section – 80CCD - Rationalisation of deduction under
section 80CCD for self-employed individual -
existing provisions of section 80CCD provides that employee or other
individuals shall be allowed a deduction for amount deposited in National
Pension System trusts (NPS). The deduction under section 80CCD (1) cannot
exceed 10% of salary in case of an employee or 10% of gross total income in
case of other individuals. However, under the provisions of section 80CCD (2)
of the Act, further deduction to an employee in respect of contribution made by
his employer is allowed up to 10% of salary of the employee. Thus, in case of
an employee, the deduction allowed under section 80CCD adds up to 20% of salary
whereas in case of other individuals, the total deduction under section 80CCD
is limited to 10% of gross total income.
order to provide parity between an individual who is an employee and an
individual who is self-employed, it is proposed to amend section 80CCD so as to
increase the upper limit of ten per cent of gross total income to twenty per
cent in case of individual other than employee.
The amendment will be effective
from 1st April 2018.