• Sanskar Garg

Sec 80CCE of Income Tax Act, 1961: Limit on deductions under sections 80C, 80CCC and 80CCD.

Updated: Oct 7

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The total of all deductions under sections 80C, 80CCC, and 80CCD [other than the deduction for employer contributions and the additional deduction under section 80CCD(1B)] shall not be greater than ₨ 1,50,000.


Illustration: Mr. Vivek is a Govt. Employee with an annual basic salary of ₨ 6,00,000, ₨ 2,00,000 as DA and ₨ 120000 as taxable allowances. His other incomes are ₨1,00,000. The Govt contributes 10% of his basic towards the National Pension Fund while he contributes 10%. He paid ₨ 25,000 as LIC premium ₨ 55,000 as principal amount of Housing loan and deposits, ₨ 60,000 in PPF. Compute his total income.


Solution:

Computation of Total Income of Mr. Vivek

Particulars

Amount

Amount

Income From Salaries:

Basic

6,00,000

Dearness allowances

2,00,000

Taxable allowances

1,20,000

Employer’s Contribution to pension scheme (10% of Basic + DA i.e., 6,00,000+2,00,000) 8,00,000 × 10/100

80,000

Gross Salary

10,00,000

Less: Standard Deduction u/s 16(ia)

40,000

9,60,000

Other Incomes

1,00,000

Gross Total Income (GTI)

10,60,000

Less: Deduction u/s

80C- LIC 25,000 PPF 60,000 Housing Loan Principal 55,000

1,40,000

80CCD (1) NPS (10% of Basic + DA i.e., 6,00,000+2,00,000)

80,000

2,20,000

As per sec.80CCE, total deduction u/s 80C + 80CCC + 80CCD (other than employer’s contribution) cannot exceed Rs. 1,50,000

1,50,000

80CCD(1B): Contribution to NPS (Amount not claimed above subject to max. of Rs. 50,000/-) (80,000-10,000 = 70,000)

50,000*

- Employer contribution

80,000

2,80,000

Total Income

7,80,000


Note: Vivek has given a total of Rs. 80,000 to NPS. In order to receive the maximum eligible sum of Rs. 1,50,000, just Rs. 10,000 is claimed under Section 80CCD. The balance is sought under Section 80CCD (1B).


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